- IDC recently estimated that iPhone shipments rose 3.5% in the third quarter.
- Analysts are optimistic about Apple's iPhone 16 sales going into the holiday season.
- Apple shares hit a record intraday high earlier this week.
Fall is shaping up to be good for Tim Cook as Apple rounds the corner into the holiday quarter.
Shipments of iPhones — Apple's cash cow — were estimated to be up 3.5% year-over-year for the third quarter, according to a Monday report from market research firm IDC.
"Despite the staggered rollout of Apple Intelligence in markets outside the US, Apple will continue to grow in the upcoming holiday season as it expects many customers to upgrade from the iPhone 13, iPhone 12, and prior models to a new AI-enabled smartphone, future-proofing their purchases for the long term," said Nabila Popal, senior director at IDC's data and analytics team.
Wall Street welcomed the key indicator of sales growth for the iPhone, which has faced stiff competition over the last year, including from Chinese rivals.
Apple's stock hit a record intraday high on Tuesday in the wake of the IDC report and analysts from Morgan Stanley, Bernstein, and Evercore ISI reiterating their "buy" ratings. The stock, which did not close at the record high, is up nearly 25% since the beginning of the year — bolstering the net worth of Cook, who owns over 3 million Apple shares, to an estimated $2.2 billion, according to Forbes.
The final weeks of the third quarter included the launch of the iPhone 16, which began shipping out to customers less than a month ago without its main selling point, the generative AI features called Apple Intelligence. With some early analysis of pre-orders suggesting demand may be softer than expected for the new devices, Wall Street was on the lookout for how sales were faring ahead of the company's earnings release on October 31.
The IDC report also indicated that Apple's competition in China isn't slowing down. Shipments for one of its local rivals, Xiaomi, grew 3.3% year-over-year in the third quarter, according to the report.
Analysts expect the rollout of Apple's AI features to drive iPhone demand into the holiday season.
"Despite facing regulatory hurdles and demand challenges in key markets like China and Indonesia, which are likely to persist, Apple's global strategy appears sound," said Jacob Bourne, tech analyst at Emarketer, a sister company of Business Insider.
Bourne said the iPhone maker is positioning itself to have a strong showing for the rest of the year. Apple Intelligence is expected to officially launch by the end of the month, and new Macs are reportedly on the way.
"As we approach the holiday season, the combination of the new iPhone 16 and the rollout of Apple Intelligence is likely to provide another significant boost to sales in other regions, potentially offsetting these localized issues," Bourne added.
While some analysts who examined iPhone 16 preorders suggested the shorter delivery times could indicate weaker demand, Morgan Stanley analyst Erik Woodring said in a note Monday that it demonstrated Apple's supply-chain apparatus was simply ready to meet demand.
Morningstar analyst William Kerwin told Business Insider that he believed Apple's AI strategy would "drive unit sales growth over the next two years, particularly for the iPhone" but cautioned that Apple's share price had "overshot the firm's fundamentals with the market being a bit too exuberant in valuing these future cash flows."
"Overall, the market clearly has more confidence in the firm now that it has a tangible AI strategy vs. the beginning of the year when shares were down on views of it being a laggard in AI," Kerwin said.
While Apple stock has yet to finish a trading day above the previous all-time high of $237.23 it hit in July, the company recently crossed a different milestone.
Sources confirmed to Business Insider that leading chipmaker TSMC has started producing chips at its Phoenix factory for Apple — delivering on a promise Cook made two years ago to use US-made chips in Apple products for the first time in nearly a decade.