Updated at 9:40 AM EST
Apple shares edged higher in early Tuesday trading, but remain in negative territory for the year, and a top Wall Street analyst suggests the iPhone maker's challenges could extend well into 2025.
Apple ( AAPL ) late last year reclaimed its title as the world's most-valuable company from AI-chip maker Nvidia ( NVDA ) , but its shares are essentially unchanged from the summer and the launch of its iPhone 16 handset in late September.
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Investors were impressed with the unveiling of Apple's AI ambitions in June, where it detailed plans to infuse the new technology, known as Apple Intelligence, across the whole of its installed base of 2.2 billion global devices.
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The rollout of those features, which include upgrades to its Siri voice assistant, an AI image generator and notification summaries, will take several months, and will be fully available only in certain markets, as Apple deals with language, tech and regulatory challenges.
Consumers, however, have balked at purchasing the new iPhone handsets that will feature Apple's new AI software. And data from a host of market-tracking sources suggest stiffer competition, higher prices and a stronger U.S. dollar have all combined as headwinds to iPhone 16 sales.
International Data, which published its closely watched report on global handset sales earlier this week, said Apple's fourth-quarter deliveries fell 4.1% from the year-earlier period to around 76.9 million units.
Apple fiscal Q1 earnings in focus
Apple held onto its title of the world's biggest smartphone seller, however, with an estimated 18.7% share of the global market, according to IDC data, just ahead of Samsung's 18% tally.
KeyBanc Capital Markets analyst Brandon Nispel sees handset sales as the defining aspect of Apple's fiscal-first-quarter report, which is expected on Jan. 30, and the tech giant's near-term outlook.
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Nispel, who reiterated his underweight rating and $200 price target on Apple in a note published Tuesday, argues that while earnings are likely to meet Wall Street forecasts, the group's outlook may disappoint.
"We think the data overall appears mixed where Apple is tracking below historical seasonality, though the [year-over-year] growth is improving off last year's weak results," Nispel said. "Overall, our data tells us we should expect to see below historical average growth in [the December quarter] vs. Apple's historical averages."
Apple is likely to report December-quarter revenues of around $124.33 billion, a 4% increase from the prior-year period, with iPhone sales rising just 2.1% to $71.2 billion.
AI upgrade cycle has yet to materialize
"AI has failed to spark an upgrade cycle in the U.S. and internationally (and) we think there is likely a headwind from an iPhone 16 ban in Indonesia," Nispel and his team wrote. "China data points appear to be a modest negative given continued competition, and [the stronger dollar] is likely to be a headwind to guidance."
Wall Street forecasts for March-quarter iPhone sales, traditionally the tech giant's weakest three-month period, are pegged at around $48.11 billion.
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"IPhone 16 failing to drive meaningful changes to upgrade rates where expectations need to move lower yet again," Nispel said. He said the cheaper iPhone SE is likely to be "cannibalistic to iPhone 16 sales" while iPad/Mac and wearables growth is likely to remain muted.
Apple shares were marked 0.3% higher in early Tuesday trading to change hands at $235.03 each, a move that leaves the stock down around 5.6% for the month.
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