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On Monday, JPMorgan revised its first half of 2025 (1H25) iPhone Electronic Manufacturing Services (EMS) build plan estimates for Apple Inc. (NASDAQ:AAPL), citing increased production orders and improving demand in China. The $3.46 trillion tech giant, which InvestingPro analysis indicates is trading above its Fair Value, continues to dominate the Technology Hardware sector with annual revenue of $391 billion. The financial services firm's analysts anticipate a positive outlook for the iPhone SE4 model, which is expected to launch soon, contributing to the overall EMS build plans for the period.
The updated forecast includes an 8% rise in the first quarter of 2025 (1Q25) iPhone EMS build estimates to 48 million units, up from the previous estimate of 44 million. This adjustment is attributed to orders pushed from the fourth quarter of 2024 and a slight uptick in demand from the Chinese market. With Apple's next earnings report scheduled for January 30, investors will be closely watching these production numbers. The new estimate for 1Q25 represents a year-over-year growth of 3%, primarily driven by the forthcoming iPhone SE4 and, to a lesser extent, the iPhone Pro Max model.
For the second quarter of 2025 (2Q25), JPMorgan has maintained its build plan estimates at 38 million units, a 7% decline year-over-year. However, the analysts believe that there should be no further reductions in the near term. Regarding the iPhone SE4, expected to hit the market in late 1Q25, JPMorgan estimates an EMS build of 13-14 million units in 1H25, with 8-9 million in 1Q25 and 5 million in 2Q25. The full-year volume for the iPhone SE4 could potentially surpass 20 million units in 2025, which is considered more favorable than the demand for its predecessor, the SE3, at its launch in early 2022.
The report suggests that the market has already accounted for the anticipated decrease in iPhone 16 orders, as reflected in the recent negative sentiment towards the iPhone supply chain. Nevertheless, JPMorgan's analysts believe the uptick in iPhone EMS builds indicates demand in 1H25 may be stronger than expected, which could lead to stabilized market sentiment. InvestingPro data shows Apple maintains a strong financial health score of 2.64 (GOOD), with 12 additional exclusive insights available to subscribers. Investors might also shift their focus to beneficiaries of the upcoming iPhone 17 series. Largan, known for its lenses, is projected to be the main beneficiary within the iPhone supply chain. For deeper analysis and comprehensive valuation metrics, access the full Pro Research Report available on InvestingPro.
In other recent news, Apple Inc. has been the subject of several analyst adjustments and regulatory scrutiny, while a new AI technology from Chinese startup, DeepSeek, is causing ripples in the tech industry. BofA Securities and Goldman Sachs both revised their price targets for Apple, with BofA dropping its target from $253 to $256 and Goldman Sachs reducing its target to $280 from $286. Both firms, however, maintained their Buy ratings. In contrast, Jefferies and Loop Capital downgraded Apple due to concerns over its earnings and revenue guidance targets.
Analysts anticipate a robust earnings report from Apple, expecting the quarter's revenue to reach $126 billion, slightly above the consensus estimate of $124 billion. The Services segment is identified as a key growth area for Apple, with revenue growth of 13% year-over-year expected for the first quarter.
In the AI sector, DeepSeek's AI assistant has soared to the top of Apple Inc.'s iPhone download charts, potentially signaling a shift in the competitive landscape of the AI industry. The app claims to offer significantly lower training and development costs, which could alter the dynamics of AI development and deployment.
In regulatory news, Apple and Alphabet (NASDAQ:GOOGL) Inc. are under investigation by the United Kingdom (TADAWUL:4280)'s Competition and Markets Authority due to concerns over their mobile market dominance. The probe aims to determine whether the companies are creating unfair barriers for competitors.
These recent developments highlight the importance for investors to stay informed about the dynamic landscape of the tech industry.
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