Rosenblatt analyst Barton Crockett reiterated a Buy rating on Apple Inc
Verizon Communications Inc
AT&T's upgrade rate dropped to 3.5%, down from 3.9% a year ago; Verizon's fell to 3.0% from 3.4% and T-Mobile's slipped slightly to 2.6% from 2.7%.
These declines came despite overall net postpaid phone subscriber growth that met Verizon and AT&T's expectations and exceeded T-Mobile's estimates.
While this data suggests the expected super cycle in smartphone upgrades has yet to materialize, analysts remain optimistic.
A super cycle had not been modeled for the September quarter and instead a forecast for muted iPhone revenue growth of 3%. Looking ahead, there is an expectation more robust growth of 4% in three of the four quarters in fiscal 2025, with the March 2025 quarter seeing a 7% boost due to the launch of a new iPhone SE.
The super cycle is anticipated to fully materialize in 2026, driven by the iPhone 17 and Apple's AI advancements.
Apple is rolling out its Apple Intelligence features in phases, starting Oct. 28 with iOS 18.1, which includes limited AI functionalities.
The iOS 18.2 will follow, introducing ChatGPT integration and advanced capabilities like Visual Intelligence and Genmoji, which will further drive future sales.
Regarding current trends, IDC data shows that Apple smartphone shipments rose 3.5% year over year in the third quarter of 2024, with global smartphone shipments up 4%.
However, U.S. carrier-subsidized phone upgrades declined by around 7% year-over-year, which only partially correlates with global sales.
This trend may be influenced by Apple's increasing use of installment plans to finance iPhone purchases, potentially reducing the impact of carrier subsidies. Despite the muted start to the current iPhone cycle, analysts believe the AI ramp will meaningfully accelerate sales within a year, with the stock likely reflecting that momentum ahead of time.
Crockett projected fourth-quarter revenue of $94.83 billion and EPS of $1.62.
AAPL Price Action: Apple stock is down 0.22% at $230.30 at publication Thursday.
