Investing.com — Apple Inc (NASDAQ:) is likely to see weaker sales for its flagship iPhone in December, UBS analysts said in a recent note, citing ongoing concerns about sluggish demand and declining market share in China.
UBS lowered its December iPhone unit/revenue estimates to 74 million units and revenue of $67.2 million from 77 million units and revenue of $69.7 million. While the brokerage is seeing some resilience in Apple's services revenue, its lowered forecast for iPhone sales saw a negative 2% revision in UBS' December quarter revenue estimates to $120.8 billion, lower than the Street's estimate of $124.9 billion.
UBS also lowered its EPS estimate for the December quarter to $2.25 from $2.31, compared to the Street's estimate of $2.36.
The brokerage pointed to recent data from Counterpoint Research that iPhone sales fell 8% year-on-year in November to 20.7 million units, with China accounting for the bulk of the decline. Global iPhone share also fell to 20.1% in November, its lowest level since November 2019.
The brokerage noted that October and November typically account for the bulk of Apple's iPhone sales in the December quarter, with a decline in November boding poorly for the tech giant.
“We now expect iPhone revenue to decline 5% year over year in the December quarter, which misses our estimates, the VA consensus, and the implied positive growth the company highlighted during its September quarter earnings report,” UBS analysts said in a note.
Apple has faced years of sluggish hardware sales, with the bulk of those declines driven by weak demand in China. The company also faces stiff competition from local players like Huawei and Xiaomi (OTC:).
Apple's inclusion of artificial intelligence features in its flagship iPhone 16 models has done little to stimulate sales, given that the company has largely lagged behind its competitors in offering artificial intelligence features. The tech giant has also not yet rolled out any AI features in China due to regulatory hurdles.
However, Apple's services revenue remained strong, thanks to support from strong AppStore sales and demand for its software offerings. This is expected to limit the overall decline in profits.
