iPhone 16 sees mixed sales response, but AAPL stock is going strong

Shares of Apple Inc. (AAPL) surged 2.3% on Monday, reaching $233 and marking their highest close since mid-July.

This strong performance came on the back of an optimistic call from J.P. Morgan regarding iPhone 16 availability.

Analyst Samik Chatterjee noted that delivery lead times for Apple’s new iPhone 16 models are improving, especially for the base models, signaling potential recovery in demand.

iPhone 16 pre-sales show mixed response

Despite the rise in Apple’s stock, pre-sales for the iPhone 16 models have presented a more nuanced picture.

Analysts estimate that Apple sold between 37 and 40 million iPhone 16 units during the first weekend of pre-sales, down over 12% from last year’s iPhone 15 launch.

Sales of the higher-end iPhone 16 Pro and Pro Max models, in particular, have been softer compared to previous years, with estimates showing a 27% drop for the Pro and a 16% decline for the Pro Max, according to Apple analyst Ming-Chi Kuo.

One of the reasons for this slower demand may be that consumers are opting for the more affordable iPhone 16 and iPhone 16 Plus models, which received substantial upgrades in terms of cameras and processors.

This trend could impact Apple’s average selling price, as the company relies heavily on sales of its premium devices to boost overall revenue.

Apple Intelligence and lead time improvements

Part of the initial hesitance in purchasing the higher-end models might stem from the delay in the release of Apple’s new artificial intelligence software, Apple Intelligence.

This much-anticipated feature is set to roll out in beta form next month alongside iOS 18.1.

Analysts suggest that consumers may be waiting for this feature to be available before opting for the Pro models, which would benefit more from the AI integration.

However, according to Chatterjee, J.P. Morgan’s Apple Product Availability Tracker indicates that lead times for the iPhone 16 Pro models are starting to normalize.

While lead times for the Pro and Pro Max remain at 23 and 29 days, respectively, Chatterjee described the longer initial wait times as likely an “aberration” due to supply chain issues and the staggered release of the AI software.

For comparison, last year’s iPhone 15 Pro Max had a delivery time of 46 days during the same period, while the base iPhone 15 models had significantly shorter waits.

This year, the iPhone 16 and 16 Plus are averaging 10 and 5 days, respectively, for delivery, suggesting that Apple has improved its supply chain efficiency, especially for the base models.

Apple’s stock performance remains strong

Despite mixed signals from iPhone 16 pre-sales, Apple’s stock has rallied 21% year to date. Monday’s rise placed Apple as the best-performing component of the Dow Jones Industrial Average.

The stock has also climbed 0.7% in September, marking five consecutive months of gains. If this trend continues, it will be Apple’s longest monthly winning streak since July 2023.

Chatterjee’s note highlights that, while iPhone 16 Pro models are taking longer to catch on, the gap between the base models and the Pro versions is narrowing as the AI software release approaches.

This development could be an indication that demand for the higher-priced models will pick up in the coming months, especially as Apple enters the all-important holiday season.

iPhone 16 sales outlook and future prospects

The pre-sale estimates for the iPhone 16 may reflect a slower start, but many analysts, including Wedbush’s Dan Ives, remain confident that the iPhone 16 will be a success.

Ives pointed to the holiday season as a critical period for the company, where iPhone 16 sales are expected to gain momentum.

“There’s still time for iPhone 16 sales to ramp up,” Ives said.

T-Mobile CEO Mike Sievert added further optimism, noting that the carrier had already sold more iPhone 16 units than iPhone 15s during the first week of pre-sales.

This, coupled with the shortened delivery times for the iPhone 16 base models, suggests that Apple may have improved its production capabilities, allowing it to meet demand more efficiently.

Although Apple won’t release its official sales figures until its earnings report next month, the initial data—along with Apple’s rising stock price—indicates that the company is well-positioned to capitalize on the upcoming holiday season.

With improvements in supply chain management and the anticipated launch of Apple Intelligence, analysts are maintaining a positive outlook for the iPhone 16’s long-term success.