Ming-Chi Kuo Says iPhone 16 Shipments To Fall 5% YoY: iOS18's Unveiling At Apple's WWDC 2024 Will Have Limited Impact On Replacement Demand

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Ming-Chi Kuo, a renowned analyst at TF Securities, has shared his insights on investors’ most frequently asked questions about Apple Inc.’s AAPL highly anticipated WWDC 2024.

What Happened: On Sunday, Kuo addressed investor queries about the market’s view of WWDC 2024, the potential for Apple’s hardware shipments to return to growth, and the types of AI services the tech giant might release.

According to him, the market expects the Tim Cook-led company to redefine user behavior with on-device AI and drive hardware replacement demand. However, he noted that the key to hardware growth lies in whether the AI services have “unique and sustainable competitive advantages.”

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Kuo’s latest supply chain surveys suggest that iPhone 16 shipments in the second half of 2024 will decrease by about 5% year-over-year compared to its predecessor. This indicates that Apple may currently believe iOS 18 will have a limited impact on driving replacement demand.

Kuo also said that many investors have high expectations with Apple’s partnership with ChatGPT-parent OpenAI, though their success depends on the cooperation models and outcomes. “For instance, while the macOS desktop version of ChatGPT is a collaboration between Apple and OpenAI, it has not impacted Mac shipments.”

Finally, the analyst revealed that Apple is developing its own cloud-based and on-device Large Language Models (LLMs), but does not expect significant development progress to be announced at WWDC 2024.

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Why It Matters: Previously, analysts have underscored the importance of WWDC 2024 for Apple’s future. Wedbush analyst Dan Ives earlier said that the event will be a “pivotal moment” for the tech giant.

Meanwhile, Gene Munster, managing partner at Deepwater Asset Management, has predicted that if iPhone sales achieve a 5% growth over the next three years, Apple could surpass expectations in 2024 and 2025. This growth could catalyze an increase in Apple shares.

Last week, Nvidia Corp. overtook Apple in market capitalization, becoming the second most valuable company in the world. Kuo attributed this shift to the robust growth trend in AI and the innovation challenges currently faced by consumer electronics.

At the time of writing, Apple was back in the second position after Microsoft Corporation with a market cap of $3.019 trillion.

Price Action: Apple shares ended Friday’s session up 1.24% at $196.89. In the after-hours session, the tech giant’s shares gained a little more, and at the time of writing, they were at $196.90. according to Benzinga Pro.

Photo courtesy: Shutterstock

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