Morgan Stanley analysts said in a note Wednesday that the Apple (NASDAQ:AAPL) iPhone 16 cycle could differ from previous years, with lead times down year-over-year (Y/Y), but note that these early trends are not yet predictive of overall demand.
According to the bank, iPhone 16 lead times have doubled since pre-orders began but are still tracking 33% lower than last year's iPhone 15 cycle.
However, they emphasize that early lead times have limited predictive power, and the trajectory over the next 10 days will be more critical in assessing demand.
For instance, Morgan Stanley says iPhone 16 Pro Max lead times are 18 days shorter than last year's model, and iPhone 16 Pro lead times are 8 days shorter. In contrast, iPhone 16 Plus lead times are up by 10 days compared to previous cycles, indicating varying demand across models.
The analysts highlight two factors impacting this cycle: increased supply, with Apple producing 5% more iPhone 16 units than last year, and the delayed release of Apple Intelligence, a key feature that could shift consumer upgrades to later in the year.
"What matters most is how iPhone 16 lead times trend over the next 10 days," say analysts. They note that historically, lead times elongate through the first in-store availability date before gradually trending lower.
In the near term, the bank sees potential stock downside of around $200, but they view any near-term estimate cuts or stock underperformance as buying opportunities.
"We'd buy any potential estimate cuts as AI-driven multi-year upgrades are a when, not an if," say analysts, which maintained its Overweight rating and $273 price target on the stock.