Investors have been raising concerns over weaker lead times for Apple's (NASDAQ:AAPL) newly-released iPhones, and potentially depressed associated order volumes.
According to Bernstein analysts, iPhone lead times represent a function of both demand and supply. They note that reports suggest that the ramp for both iPhone 16 base and Pro models “should be relatively normal/strong this year.”
Analysts also said that iPhone seasonality may be partly skewed by the delayed launch of Apple Intelligence.
“We suspect Apple’s advertising activity to step up significantly as AI features are released, potentially leading to somewhat different seasonality (including weaker initial demand) for iPhone 16,” they wrote in a Wednesday note.
Historically, initial iPhone lead times have shown limited correlation with the strength of the product cycle.
While current lead times are not significantly different from those of the past three iPhone cycles, which were relatively subdued, even strong cycles—such as those for the iPhone 12, iPhone X, and iPhone 6—did not see significantly longer lead times, Bernstein highlights.
Moreover, the investment firm points out that Apple’s qualitative characterization of the iPhone’s initial launch strength on its Q4 call, which is typically hosted around November 1, has also not been helpful in gauging cycle strength.
But what is perhaps the most important observation, the tech giant’s guidance for the December quarter “have historically not been well correlated with the strength of iPhone cycles," analysts said.
“It is unclear if this is because Apple is not confident in gauging the strength of an iPhone cycle when it reports its Q4 results or whether the company prefers not to convey such information,” analysts explained.
Overall, Bernstein’s team believes that it’s still too early to gauge the strength of the iPhone 16 cycle.
Even during Apple's earnings call in six weeks, the company is unlikely to provide definitive commentary or guidance, analysts said. Key supply chain data typically emerges in mid-to-late November or early December, and demand patterns could be influenced by the gradual rollout of Apple Intelligence.