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Apple Inc. (NASDAQ:AAPL) shares experienced a notable decline on Monday as market sentiment shifted following concerns over lower-than-expected demand for the newly launched iPhone 16 Pro. The company’s stock dropped approximately 3% during early trading, cutting into its gains for the year and reflecting investor apprehensions over the tech giant's flagship product.
iPhone 16 Pro Pre-Order Figures Fall Short
The decline in Apple’s share price was prompted by a report from renowned analyst Ming-Chi Kuo of TF International Securities. Kuo, known for his accurate insights into Apple’s supply chain, revealed that pre-orders for the iPhone 16 Pro, which began on Friday, have been weaker than anticipated. According to Kuo’s estimates, pre-order sales of the iPhone 16 reached approximately 37 million units. This marks a significant drop of nearly 13% compared to the launch of the iPhone 15 last year.
One of the key reasons behind the softer demand, Kuo noted, is the absence of a major feature—Apple Intelligence—that was expected to be a significant selling point for the iPhone 16 series. The feature, which is part of Apple’s push into artificial intelligence (AI), was not made available at launch, dampening excitement for the new device.
Impact on Apple’s Stock Performance
Apple’s stock had been on a steady upward trajectory in recent months, buoyed by optimism surrounding its foray into AI and the expected success of its latest iPhone models. After a weaker start to the year, shares rallied over the past four months as investors grew hopeful that the iPhone 16, particularly its Pro version, would drive sales growth for the company.
However, Monday’s 3% drop brought Apple’s year-to-date gain down to around 12%, underperforming the Nasdaq 100 Index, which has risen about 15% over the same period. This decline underscores the importance of the iPhone 16 launch to Apple’s overall financial performance and market sentiment.
Analyst Reactions to the iPhone 16 Launch
The tepid response to the iPhone 16 launch comes after last week’s widely anticipated Apple event, where the company unveiled its latest hardware. While the launch showcased new features and incremental upgrades, many analysts and investors were left underwhelmed, as several key details had been leaked beforehand.
Morgan Stanley’s Erik Woodring, in a note to clients last week, emphasized that the focus would quickly shift from the event itself to early iPhone 16 pre-order data. He indicated that pre-order figures and lead times, which began to emerge on Friday, would be crucial in gauging the iPhone 16’s potential success in the market.
Matthew Maley, chief market strategist at Miller Tabak + Co., highlighted the concerning nature of the weaker-than-expected demand for the iPhone 16, particularly given the timing. “We’re heading into the holiday selling season soon,” Maley noted, adding that the risk of a meaningful decline in Apple’s stock price has “risen in a material way” as a result of the disappointing pre-order numbers.
Apple Intelligence: Delayed Key Feature
One of the most anticipated aspects of the iPhone 16 Pro series was the integration of Apple Intelligence, a suite of AI-powered features designed to enhance user experience and compete with advancements in AI from other tech giants. However, the delay in launching this feature has been cited as a significant factor in the weaker demand for the new iPhone.
Apple Intelligence was expected to be a major draw for consumers, particularly as the market becomes increasingly focused on AI capabilities in smartphones. The absence of this feature at launch may have tempered consumer interest in upgrading to the iPhone 16 Pro, especially given the competitive landscape in the premium smartphone market.
Market Outlook and Upcoming Challenges
The weaker demand for the iPhone 16 Pro poses challenges for Apple as it approaches the critical holiday shopping season. The fourth quarter is typically a strong period for the company, as consumers flock to buy new devices ahead of the holidays. However, if pre-order trends are any indication, Apple may face headwinds in achieving the kind of sales figures it has enjoyed in previous years.
Despite the initial concerns, some analysts believe Apple could still recover momentum if the delayed AI features are rolled out in the coming months. Additionally, other models in the iPhone 16 lineup, such as the base model and the iPhone 16 Plus, may attract different segments of consumers, potentially offsetting some of the weakness in the Pro series.
Moreover, Apple’s broader ecosystem of products and services, including its wearables, subscription services, and Mac lineup, may help cushion the impact of softer iPhone sales. The company’s ability to innovate across multiple product categories has long been a key factor in its resilience, even when one particular product line underperforms.
Bottomline
Apple’s (NASDAQ:AAPL) stock faced a setback this week as concerns over the demand for its iPhone 16 Pro model took center stage. While pre-order numbers have fallen short of expectations, the absence of a key feature, Apple Intelligence, appears to have contributed to the lower interest. As the company moves into the all-important holiday season, investor attention will remain focused on how Apple manages its product launches and whether it can reignite consumer excitement around its latest innovations.
With the broader market still optimistic about the role of AI in Apple’s future product lines, the coming months will be critical in determining whether the iPhone 16 can reverse its sluggish start and contribute to the company’s ongoing success. In the meantime, the stock’s performance will likely be influenced by developments in pre-order figures, consumer sentiment, and Apple’s ability to deliver on its AI-driven promises.
