Apple Staring At Market Share Decline In China Amid Declining iPhone Shipments: Top Analyst Flags Why Some Models Could Be Face Shipping Momentum Challenges – Apple (NASDAQ:AAPL)

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By Ronald Tech

Apple Inc. AAPL is experiencing a drop in its market share in China. This decline is attributed to a decrease in iPhone shipments, as reported by supply chain analyst Ming-Chi Kuo.

What Happened:  Kuo, an analyst at TF Securities, revealed that Apple has been “cautious” in discussing its 2025 iPhone production plans with key suppliers. Despite the expected launch of the new iPhone SE 4, Kuo forecasts a 6% year-over-year decline in shipments for the first half of 2025.

He also expects Apple’s market share to continue to decline, attributing this to the thin design of two upcoming iPhone models, which may only support eSIM, a feature not widely promoted in the Chinese market.

“These two models could face shipping momentum challenges unless their design is modified,” he said.

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In December, while overall smartphone shipments in China remained stable year-over-year, iPhone shipments saw a decline of 10% to 12%. Kuo pointed out that Apple’s on-device artificial intelligence feature, Apple Intelligence, has yet to drive hardware upgrades or boost services revenue.

For 2024, Apple’s estimated iPhone shipments were around 220 million units, with projections for 2025 ranging from 220 million to 225 million, falling short of the market consensus of 240 million or more, according to Kuo.

Why It Matters: This news comes in the wake of a series of challenges for Apple. Earlier in the month, an analyst downgraded Apple from Neutral to Sell and lowered the price target from $202 to $188. MoffettNathanson analyst Craig Moffett cited the lack of traction for iPhone 16 models featuring artificial intelligence and ongoing geopolitical tensions with China.

See also  The Rise of Palantir: A Potential Trillion-Dollar Player in the AI MarketThe Dominance of AI Titans

The ascent of artificial intelligence (AI) as a driving force in the market is undeniable, with major players like Apple, Microsoft, Nvidia, Alphabet, Amazon, and Meta Platforms leading the way. These tech giants, with market cap values in the trillion-dollar range, showcase the immense potential embedded in AI technology.

While the likes of Apple and Microsoft command market caps exceeding $3 trillion, the volatile but formidable Nvidia holds strong at $2.6 trillion. Alphabet, Amazon, and Meta Platforms follow closely behind, boasting market caps of $1.9 trillion, $1.7 trillion, and $1.2 trillion, respectively. The common thread binding these coveted market leaders is the boundless frontier presented by AI.

A Silent Force Emerges

With a current market cap of $60 billion, Palantir Technologies (NYSE: PLTR) may appear modest compared to its behemoth counterparts. However, beneath the surface, Palantir is strategically positioning itself to potentially join the esteemed trillion-dollar club. While many companies are still in the nascent stages of crafting an AI strategy, Palantir has silently honed its skills over two decades, primarily focusing on AI solutions for the U.S. government and global allies.

Transitioning its expertise to cater to enterprise-level entities, Palantir introduced the Artificial Intelligence Platform (AIP) powered by generative AI, carving a niche for itself in the market. Embracing a hands-on approach, the company conducts boot camps where users collaboratively develop and implement AI solutions alongside Palantir engineers, yielding swift and palpable results.

Palantir recently disclosed a milestone achievement, with over 1,025 organizations undergoing boot camps, resulting in significant deals worth over a billion dollars. Notably, the company reported a 27% year-over-year revenue surge in the second quarter, driven by robust U.S. commercial revenue growth catalyzed by AIP.

The Road to Trillion-Dollar Status

Leveraging its rich AI legacy, Palantir enjoys a competitive edge in serving government and enterprise clients seeking cutting-edge AI solutions. The realm of generative AI has captivated global governments, unveiling a promising arena for sovereign AI development.

Wall Street projections envision Palantir generating $2.7 billion in 2024, translating to a forward price-to-sales (P/S) ratio of approximately 22. Sustaining this growth trajectory, Palantir would need to scale its revenues to around $45 billion annually to justify a $1 trillion market cap. With a 27% year-over-year revenue increase in the latest quarter, Palantir could conceivably breach the trillion-dollar threshold by 2036 at the current pace.

However, the rapid adoption of generative AI signals an accelerated trajectory for Palantir. Noteworthy is the U.S. commercial revenue's impressive 40% and 55% year-over-year growth in the first and second quarters, respectively. As customer count within this segment surged by 69% and 83% in these respective periods, Palantir's ascent to the trillion-dollar echelon could materialize much sooner.

Estimates hint at the vast expanse of the generative AI market, projected to burgeon between $2.6 trillion and $4.4 trillion annually, as per McKinsey & Company. Palantir's sustained growth and industry primacy set the stage for a rapid ascent, potentially propelling the stock to a trillion-dollar valuation in the foreseeable future.

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Apple also reached a $95 million settlement in a lawsuit regarding allegations of unauthorized Siri recordings. After the Siri privacy policies lawsuit, the company clarified that it has never sold or used Siri data for marketing purposes.

Despite these controversies, Apple’s CEO Tim Cook saw a significant increase in his annual compensation in 2024. Cook’s total compensation for 2024 rose by 18% from the previous year, reaching $74.6 million, the company said in a proxy filing on Friday.

Price Action: On Friday, Apple’s stock saw a 2.41% decrease, according to Benzinga Pro data.

Apple has a consensus price target of $245.17, according to 30 analysts tracked by Benzinga The most recent ratings, issued by MoffettNathanson, Bernstein, and B of A Securities on Jan. 7 and 3, 2025, suggest an average price target of $234.67, implying a slight downside of -0.99% based on these assessments.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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