Apple Anticipates Biggest Q3 Revenue Decline Since 2016 Due to Sluggish iPhone Sales: Report

Analysts have stated that Apple is expected to announce a decline in iPhone sales during the April-June quarter due to consumer anticipation for a new model in a sluggish economy. Consequently, it is crucial for the company to provide specific information on how it is leveraging artificial intelligence to enhance its growth.

The world’s most valuable company closes its Big Tech earnings on Thursday, and Refinitiv says total quarterly revenue is likely to fall 1.6 percent, its steepest drop in third-quarter revenue since 2016.

iPhone sales likely fell more than 2% in the period, according to 24 analysts polled by Visible Alpha, compared with a nearly 3% increase a year earlier and a 1.5% rise in the quarter ended in March.

The quarterly report could mark a break from a buoyant earnings season for companies like Meta Platforms, Alphabet and Microsoft, which have shown flexibility in their cloud businesses and grown into digital ad sales.

“Apple is not immune to general macroeconomic trends and will continue to set the pace (in the smartphone industry) for some time to come,” said Bob O’Donnell, founder of TECHnalysis Research.

With details expected next month of the new iPhone 15 — where some models could feature the more widely accepted USB-C port — iPhone sales could take a small hit in the July-September quarter, said analysts who had forecast mixed results. for the period.

Apple doesn’t traditionally provide quarterly insight, but analysts expect the company to outline how it will use artificial intelligence to improve its future products.

The company has so far avoided buzzwords like artificial intelligence at its events, unlike tech giants like Alphabet and Microsoft. Last month, Bloomberg News reported that Apple has been quietly building its own framework for creating large language models known as “Ajax.”

“We expect Apple’s update comments to be the focus of its AI efforts,” a Wells Fargo analyst wrote in a research note, adding that any comments related to the technology could lift the stock.

Apple shares are up more than 50% so far this year, while the tech-heavy Nasdaq Composite is up nearly 37%.

IPHONE SLOWDOWN

Much of the weakness in iPhone sales is expected to come from the Americas, where revenue is expected to fall 6%, analysts said. Sales in China, Apple’s third-largest market, are expected to remain flat due to an uneven economic recovery, although the company has outperformed Android rivals in the country.

According to market research company International Data Corp., overall smartphone shipments to China fell 2.1% in the second quarter.

“Most investors feel that a soft China could pose a risk to the numbers and further commentary, but Apple’s position in China is on solid ground and the company is likely to see little, if any, decline in iPhone sales,” Piper Sandler analysts said.

“If there is any weakness in sales from China, it is likely to be easily offset by strong sales momentum from India,” they added.

According to data from Refinitiv, Mac and iPad sales are expected to decline by 10.6% and 11.2%, respectively.

But the services business — Apple’s App Store and audio and video streaming services — could be a bright spot thanks to a booming ad market, some analysts said.

The business, which accounts for about a quarter of Apple’s total revenue, is expected to grow 5.7% as it also benefits from price increases for iCloud subscriptions, although the pace is about the same as in the previous three quarters.