Strong iPhone and Apple Watch Demand Not Enough to Stave Off Inflation Fears for AAPL Investors
Apple has a schedule for releasing its latest iPhones and Apple Watches that has become so reliable that you can set your watch by it.
Each fall, in advance of the holiday season, Apple (NASDAQ: AAPL) holds an event where it shows off the company’s latest and greatest gadgets, with the iPhone typically being the star of the show. Shortly after, the company begins to ship the products to eager consumers.
This year, despite high inflation and fears of a recession, demand for Apple products has been no different. Despite the products carrying the now-standard annual price increase and consumers having less disposable income, there has not been a noticeable slowdown in demand. For most Apple owners, a yearly upgrade is considered a must-have.
This year, the pro and ultra models are selling exceptionally well, which should spell good news for Apple’s revenues and margins.
J.P. Morgan Technology analyst Samik Chatterjee commented on the trend he’s seeing:
“iPhone demand indications are strong following the launch, and while similar to last year, the mix continues to be more favorable towards Pro models, lead times for the two Pro models are already more extended relative to last year. Delivery lead times have already reached extended lengths one day after launch vs. extended lead times one-week post-launch for the iPhone 13. Amongst the remaining products, lead-time-based demand indication for the Apple Watch Ultra is quite strong as well. In the US, Week 1 delivery timing for the 14 and 14 Plus tracks to the first available dates (Sept. 16 and Oct. 7), which is consistent with both the 13 mini and 13 tracking to the first available dates, whereas the Pro and Pro Max lead times have extended lead times of 35 and 42 days, respectively. Relative to in-store, lead times track to the first available dates, albeit with limited SKUs available for the 14 Pro and 14 Pro Max. Recall, the US accounts for ~35% of iPhone shipments.”
All indications are that demand for Apple’s products remains strong. Unfortunately, that strong demand was not enough to prevent skittish investors from selling the stock in response to September’s CPI report, which saw inflation remain persistently high. Like the rest of the market, Apple sold off 4% on Tuesday. This will likely be the case until inflation comes back down to normal. For now, at least, strong performance is still taking a backseat to macroeconomic headwinds.
Shares of Apple last traded at $156.28 per share, down 4.37% on the day. YTD, AAPL stock is down 14.14%.
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