© Reuters. Citi says supply chain checks on Apple (AAPL) show no near-term production cuts
Even as Apple (NASDAQ:) is set to report earnings on Thursday, Citi analysts released a note Tuesday previewing the top 3 topics that investors are closely watching: iPhone demand, Vision Pro first impression and AI efforts.
Citi noted that despite concerns about iPhone sales in China, their supply chain checks don’t show near-term production cuts for December and March quarters.
“In Q4, Apple shipment grew +12% compared with +8.5% worldwide, taking nearly 25% market share in the quarter,” highlighted analysts in the client note.
“For China specifically, Apple also took the top spot in CY2023 with -2.2% Y/Y growth vs -5% worldwide. In Q4, Apple’s market share in China was 20% vs 20.6% a year ago, or -2.1% y/y growth vs +1.2% worldwide, which is better than expected thanks to the promotions and resiliency in high-end smartphone demand,” they added.
With Apple set to refresh iPad lineups in March, this could be a catalyst for demand and drive ASP higher, said Citi.
Coming to its expectations for Vision Pro headsets set to be launched later this week, Citi is optimistic given the early feedback from media and tech reviewers as well as preorder numbers.
“We note that (1) Apple is already envisioning future workplace applications for the device, including using it for surgery, aircraft repair, and education. (2) Early review of the device by experienced XR users depict an unmatched ease of use, which we believe can be the most prominent adoption factor early on,” wrote the analysts.
While Vision Pro priced at $3,499 will likely deter some customers from buying the product, “widespread acknowledgment of the device’s ease of use, a multitude of use cases and technological lead vs. competition can set up upcoming more affordable versions very well.”
Finally, on Apple’s AI efforts, Citi notes that “notable progress” has been made in recent months on the company’s LLMs called “Ajax.”
Further, Apple’s research on ‘LLM in a Flash’ has led the analysts to “believe the ability to run advanced LLM with limited memory could improve on-device AI capabilities meaningfully and open opportunities for new applications that were previously resource-limited.”
While Apple has been lagging other tech giants in the AI space, developments over the last two years look promising.
“Along with Apple’s AI/ML hiring surge over the past two years and the significant efforts in AI M&A, we believe Apple is speeding up to bring generative AI to iPhones and other hardware products…We expect Apple to introduce more AI features in the upcoming WWDC and iPhone 16 later this year.”
As of Tuesday afternoon, Apple stock is down 2.07% at $187.77.