Early demand indicators show strong lead times for the iPhone 17 from Apple Inc. (NASDAQ:AAPL). Deepwater Asset Management's Gene Munster highlights the strength of Apple's new smartphone, which could drive upside potential for the stock in the coming year.
Apple Sees Strong Early Demand
Munster says Apple's strength in hardware and demand for the iPhone 17 could do enough to offset expectations for AI.
"Over the past year, Apple may have stumbled on AI, but they continue to lead when it comes to hardware," Munster said. "My sense is that the iPhone 17 will exceed investors' expectations, proving that a compelling iPhone in hand is worth more than the promise of Apple Intelligence."
Munster said looking at lead times for iPhones has often been a good indicator of how successful each new smartphone will be. The early data shows strong lead times for the iPhone 17, which could see this iPhone model exceeding Street estimates for fiscal 2026.
"This sets the table for iPhone upside over the next year."
The Deepwater Asset Management co-founder shows the lead times for the iPhone 17 in eight countries and compares them to the lead times for the iPhone 16 based on data from Apple's online store.
The lead times average 2.6 weeks for the eight countries, up from an average of 1.7 weeks for the iPhone 16 at the same point last year.
In China, the average lead time is 4.4 weeks, up 119% from last year's 2.0 weeks. In the United States, the lead time is up 57% year-over-year to 1.3 weeks.
Munster said China "stands out" with its higher wait time on all models, except for the iPhone Air, which faces a delay in the country due to its design needing approval from the country's authorities.
"Early signs suggest demand in China is strong. JD.com, a leading Chinese online retailer, reported that first-day iPhone 17 pre-orders exceeded last year's iPhone 16 launch," he noted.
Munster's current estimate is for 8% year-over-year iPhone revenue growth in the current quarter, which is ahead of a Street consensus estimate of 7% growth.
Read Also: Apple Stock Has More Upside: Analyst Says ‘The Street is Clearly Underestimating This iPhone Cycle’
What Apple Needs For A Higher Stock Price
Munster said Apple needs to beat estimates in the current quarter and share higher guidance for the next quarter for the stock to keep going up.
Pent-up demand for iPhone upgrades could lead to higher sales than expected, Munster predicts. The investor sees fiscal 2026 iPhone growth of 8%, beating a Street estimate of 5%.
While this is better than recent years, it comes shy of the 39% year-over-year growth in fiscal 2021.
"In the end, this won't be a supercycle at up 8%, but it will be stronger than many are expecting and a nice improvement," Munster said.
Consumers may also become more focused on the newly reported foldable iPhone and additional AI capabilities in future phone models.
Munster admits that Apple has been light on AI for the past few years, but says the company has more time to figure out its plan. "In the 20-plus years I have studied Apple, I have never seen a product miss as significant as Apple Intelligence."
While Apple Intelligence has missed, Munster says the AI bar has been reset and pressure is now on the tech giant for more AI details coming next year.
Apple's substantial user base could help the company survive against the competition as consumers await new AI features.
"A flashy AI feature from a competitor won't shake Apple's 1.7B users from the tree," Munster concluded.
Apple Stock Price
Action Apple stock is up 3.6% to $254.27 on Monday versus a 52-week trading range of $169.21 to $260.09. Apple stock is up 4.3% year-to-date in 2025.
Read Next:
- If You Invested In Apple Stock Instead Of Buying iPhones Each Year, Here’s How Much You’d Have Today
Photo: Shutterstock
