Apple's iPhone sales could have risen by 3% during the key holiday season, the best increase in five quarters, but analysts expect the company to face a tough year domestically, as the company faces regulatory headwinds and stiff competition from Huawei.
Wall Street expects the company's latest flagship, the iPhone 15, to face stiff competition from Samsung's Galaxy S24 with industrial intelligence and Huawei phones with chips made in China.
Generative AI could be central to deciding who will win the crown of the world's biggest company this year.
Microsoft has led Apple in the last few sessions with a $3 trillion valuation, and analysts expect Microsoft to consolidate that lead soon as it sells more AI products.
Even though Apple's stock prices are up nearly 50% last year, they are still the smallest of the so-called Big Seven.
Apple has been facing some headwinds domestically, with the domestic real estate industry struggling to fix the problem, while hinting at the loss of iPhone popularity in offices.
iPhone shipments to China fell 2% in the fourth quarter of last year, according to market research firm IDC, while analysts say Android phones are making a comeback in China with the help of Huawei's popularity.
The iPhone faces structural challenges that will lead to a significant decline in shipments in 2024, including the emergence of a new paradigm for high-end phone design and the continued decline in shipments in the Chinese market. TF International** analysts said in a note.
The brightest spot in Apple's first-quarter results, scheduled for Thursday, is likely to be its services division, which includes revenue from the App Store, Apple TV and Apple Music.
According to LSEG, Apple's services division revenue for the quarter ending December is likely to grow by 125%。
However, the App Store faces headwinds in Europe, where a new law will force Apple to allow developers to skip its payment system and pay commissions to Apple starting in March.
Overall, Apple expects quarterly revenue to grow slightly by 07%, ending four consecutive quarters of decline.
But Bernstein analysts** iPhone sales will fall by 3% in 2024, barely boosting overall revenue.
Apple's Vision Pro is the riskiest product since the iPhone was launched more than a decade ago, and pre-orders for the product rose in the U.S. on January 19. Analysts don't expect it to be a meaningful revenue driver this year.
Angelo Zino, an analyst at CFRA Research, said: "The clearer GenAI plan, the successful launch of Vision Pro, and the updated capital allocation policy have the potential to be a catalyst for Apple over the next six months. ”