Tech giant Apple’s (NASDAQ: AAPL) smartphones have always been extremely popular, and the launch of its iPhone 15 earlier this year has only bolstered its popularity. Even in terms of numbers, the company’s smartphones made up close to 50% of its sales in the calendar third quarter, generating revenues of $43.8 billion. This indicated a growth of 3% year-over-year and was a record for the September quarter, mostly fuelled by the popularity of iPhones in emerging markets. AAPL continues to expect iPhone sales to grow in the fourth quarter, even amid supply constraints.
Smartphone Sales Ticked Higher in October
There was good news for smartphone companies, including Apple, in the month of October. According to Counterpoint Research, global smartphone sales increased by 5% year-over-year in October after declining for 27 straight months.
The research firm stated that a major reason for the growth in retail sales was due to emerging markets, with “continuous recovery in the Middle East and Africa, Huawei’s comeback in China, and the onset of the festive season in India.”
Counterpoint data indicates that globally, AAPL had a 16% market share of the global smartphone market in the third quarter, coming in second place behind South Korea’s Samsung.
iPhone Sales Declined During China’s Singles Day Period
AAPL iPhone sales are not doing well in China. According to Counterpoint, sales of iPhones declined by 4% year-over-year in China during the two-week period from October 30 to November 12. On the other hand, its Chinese peers like Huawei and Xiaomi saw their smartphone sales soar by 66% and 28% year-over-year, respectively.
China is a major market for AAPL, and it is facing increasing competition in the country. Counterpoint stated that Apple’s sluggish performance during China’s Singles Day period was a result of supply chain constraints that have hampered the availability of its iPhone 15 models.
Analysts Believe AAPL’s iPhone Supply Chain Constraints Will Ease
Top-rated JP Morgan analyst Samik Chatterjee reiterated his Buy rating on the stock. This comes as the research firm’s product availability tracker for iPhones indicated that iPhone 15 delivery times have been reduced by two days to an average of two days in Week 10. Notably, the 15 Pro Max’s lead times are now aligned with other models, suggesting balanced supply and demand.
As a result, the analyst anticipates no Q1 supply challenges, barring unforeseen disruptions.
Is Apple a Buy, Sell, or Hold?
Analysts remain bullish about AAPL, with a Strong Buy consensus rating based on 25 Buys and eight Holds. Year-to-date, AAPL stock has surged by more than 50%, and the average AAPL price target of $201.99 implies an upside potential of 5.6% at current levels.
Bottom Line: Q4 Will Likely be Good for AAPL
Overall, AAPL’s calendar fourth quarter could turn out to be another good one for its iPhones. Indeed, smartphone sales seem to have resumed their growth trajectory, while Apple’s delivery times have been reduced. Therefore, Apple will likely be able to satisfy more customers.
