Apple iPhone 17 demand tracking to surpass 16 based on delivery lead times- JPM

JP Morgan analysts report stronger initial demand for Apple's iPhone 17 series compared to the iPhone 16, citing extended delivery lead times in key markets for the base model and new Air variant. This robust pre-order performance, particularly for the Air model, could bolster Apple's sales outlook, offering a positive counterpoint to recent negative market reactions over the launch and ongoing sales deceleration in China, despite potential regulatory hurdles for the Air model's e-sim technology in that region.

Analysis

According to a research note from JP Morgan, initial pre-order demand for Apple Inc.'s iPhone 17 series is tracking stronger than the comparable launch week for the iPhone 16, based on extended delivery lead times in key markets including the U.S., China, Germany, and the UK. Demand appears particularly robust for the base iPhone 17 and the newly introduced, ultra-thin Air model, which show U.S. lead times of four and seven days, respectively, compared to zero days for their predecessors. This strong early interest in volume-driving models provides a positive signal for unit sales, potentially offsetting initial investor disappointment over the launch event's perceived lack of new AI features. However, the data also indicates a potential mix-shift towards lower-end models, as lead times for the higher-margin iPhone 17 Pro (4 days) are shorter than its predecessor (6 days), while the Pro Max (21 days) is roughly flat. This positive demand momentum is tempered by a specific headwind in China, where the new Air model reportedly faces regulatory hurdles related to its e-sim technology.

Key Decisions for Investors

• The strong pre-order data suggests a potential upside to near-term revenue forecasts, possibly indicating that the initial negative stock reaction to the product launch was overdone.
• Investors should monitor the sales mix between the base/Air models and the higher-margin Pro models, as a sustained shift towards lower-priced units could impact average selling prices and overall profitability despite higher unit volumes.
• Closely track regulatory news out of China, as any significant delays or restrictions on the new iPhone 17 Air model could materially dampen sales performance in a critical market.