One Apple watcher predicts iPhone sales to bounce back, pushing Apple stock into stratospheric levels despite some signs of slowing iPhone sales.
Apple reported in May that iPhone revenues were down 4% in the last six months. In a research note obtained by Insider, respected Wall Street analyst Dan Ives estimates there are 250 million aging iPhones that have not been updated for at least four years.
It is Ives’ belief that the iPhone 15 will convince these people to buy new versions and spend more money on them, as well as the iPhone faithful. As a result of his prediction, Apple is expected to raise prices and charge an average of $925, a $100 increase over the average price Apple has been charging for new iPhones for the past 18 months.
Apple’s newest iPhone is expected to have a higher price tag when it is announced in the fall, and Ives has been right when he has predicted iPhone pricing in the past.
A state-of-the-art iPhone 14 Pro Max starts at $1099, while a slightly smaller pro starts at $999. However, you can get it for $799 if you want 128G of storage (doubling that storage will cost $100 more). So when Apple announces the new iPhones, which usually happen in the fall, we’ll have to wait and see if Apple raises prices everywhere, just on its key $799 model, or even at all.
A real underrated star of Apple’s future isn’t the new Vision Pro AR headset, according to Ives. As part of its cloud services (storage, App Store, Apple TV, Fitness, advertising, etc.), he believes the Services business is where Apple makes its money. In his note, he writes that Services is on track to reach $100 billion by 2020 compared with about $50 billion in 2020.
In particular, Apple’s revenue for Services for the past six months was $41.7 billion, up 6%, (as of April 2nd, FY 23). As a result, Ives may be optimistic that Services will reach $100 billion instead of $82 billion, at least in its current fiscal year.
Nevertheless, he is correct that services growth is astounding and that it is rapidly approaching $100 billion.
Apple’s share prices remain a relative bargain, according to Ives. Despite Apple not yet reaching his previous price target of $205, he raised it to $220/share. That is a bold prediction, given that Apple has yet to reach that price. In June, the stock hit one all-time high after another, and is currently trading at about $181.
There hasn’t been this much optimism about Apple’s future in years, regardless of whether the Vision Pro succeeds or bombs.
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