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Apple (AAPL) Stock Rises on Strong Demand for New iPhones

  • Consumer tech giant Apple (AAPL) stock swung higher in Monday’s afternoon session.
  • Wall Street analysts cited strong demand for the company’s new product releases.
  • AAPL stock moves against the implications of a possible recession.
AAPL stock - Apple (AAPL) Stock Rises on Strong Demand for New iPhones

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Although fears of the Federal Reserve causing a rough landing for the economy shook up the market late last month, Apple (NASDAQ:AAPL) continues to rise above the implications of a possible downturn. AAPL stock is gaining about 4% at the time of writing on Monday afternoon. Multiple analysts cited strong demand for Apple’s new product launches, boding well for stakeholders.

Prior to their debut — particularly for Apple’s iPhone 14 — some analysts cited concerns about supply constraints and shutdowns in China. Additionally, the iconic smartphone represents about 52% of Apple’s total revenue. Therefore, the company depends on solid performances for its flagship product.

So far, early results should encourage stakeholders of AAPL stock. According to JPMorgan Chase analyst Samik Chatterjee, “iPhone demand indications are strong following the launch, and while similar to last year the mix continues to be more favorable towards Pro models, lead times for the two Pro models are already more extended relative to last year.”

Chatterjee also noted that among the remaining products, “lead-time based demand indication for the Apple Watch Ultra is quite strong as well.” The JPM analyst has an “outperform” rating on AAPL stock and a $200 price target.

Wedbush Securities’ Dan Ives and John Katsingris also weighed in on the implications for AAPL stock. “This speaks to the underlying demand story that Apple anticipates for this next iPhone release with our estimates that 240 million of 1 billion iPhone users worldwide have not upgraded their phones in over 3.5 years,” the analysts remarked.

AAPL Stock Belies Economic Concerns

In late August, Fed chair Jerome Powell indicated during his policy speech at the annual economic symposium at Jackson Hole, Wyoming, that the central bank recognized inflation as a long-term threat. Therefore, Powell seeks to restore price stability. Nevertheless, he acknowledged that reducing inflation “is likely to require a sustained period of below-trend growth.” On paper, the narrative should be net negative for AAPL stock.

Although connected devices represent an indelible component of modern society, acquiring the latest consumer tech product is a discretionary motivation. However, strong opening demand for Apple’s latest device suite indicates that even with multidecade highs in inflation, the brand features robust and resilient social cachet.

While Apple did deliver a pleasant surprise by keeping iPhone 14 prices the same as their predecessor counterparts, at $1,099 a pop for the top-of-the-line iPhone 14 Pro Max, it’s an expensive proposition for many households. As well, the latest Apple Watch Ultra stands at $800 per unit. Nevertheless, strong demand for this smart device suggests consumers have brushed aside concerns about a rough landing for the economy.

Despite the positive implications for AAPL stock, investors should keep an eye on consumer purchasing power. If the Fed’s hawkish pivot succeeds, the relative rise in currency value may impact demand, particularly if it coincides with an economic slowdown.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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