Apple Drives Tech Sell-Off Amid Analyst’s Caution on iPhone 16 Demand

Apple’s stock experienced a notable decline on Monday, dropping approximately 3% and pulling down the broader tech sector along with it.

The shares were trading at $215.90, reflecting a 2.9% decrease shortly after midday. This downturn followed a report from analyst Ming-Chi Kuo of TF International Securities, who suggested that demand for the iPhone 16 series was weaker than expected.

Kuo estimated that the iPhone 16 series managed to achieve 37 million pre-orders during its initial weekend, which falls nearly 13% short of the pre-orders recorded during the launch of the iPhone 15 last year.

The poor demand for the latest iPhone can be attributed in part to Apple’s delayed launch of its highly anticipated new feature, Apple Intelligence. Kuo pointed out that the absence of this major selling point at the time of the iPhone 16’s release likely influenced consumer interest.

“One of the key factors for the lower-than-expected demand for the iPhone 16 Pro series is that the major selling point, Apple Intelligence, is not available at launch alongside the iPhone 16 release,” Kuo stated in a note released over the weekend.

Last week, Apple announced that the rollout of Apple Intelligence—an advanced AI integration—would begin in English next month, with additional features expected in subsequent months. However, plans for introducing the AI in other languages are not scheduled until next year.

This decline in Apple’s stock is contributing to a broader downturn in the tech sector. The Nasdaq Composite fell 0.8%, while the S&P 500 remained nearly flat and the Dow Jones Industrial Average saw a slight increase.

Prominent semiconductor companies are also feeling the impact of Apple’s struggles. Notably, Micron shares dropped by 4.5%, and Broadcom saw a decrease of 3%. Additionally, Super Micro Computer, Inc experienced a dip of about 1% around noon ET. Taiwan Semiconductor Manufacturing Company, which produces chips for Apple, also saw its stock decline by approximately 3%.

Apple’s current losses come after a period of four consecutive months of gains, driven by projections of higher iPhone sales linked to new AI features. Despite the recent downturn, Apple’s stock has increased around 12% this year, which trails behind the Nasdaq’s 15% growth.

Kuo suggested that if shipments do not improve with the anticipated launch of Apple Intelligence and upcoming holiday promotions, Apple may need to rethink its product strategy. He indicated that such a shift could lead to more aggressive iPhone product strategies in 2025 to stimulate market interest.

“In that case, I believe that Apple will implement more aggressive iPhone product strategies in 2025 to stimulate market demand,” Kuo noted, emphasizing the need for Apple to adapt in response to consumer trends.

The tech industry is watching Apple closely, as its stock performance often serves as a bellwether for the overall health of the technology sector. Investors will be keen to see how Apple’s new initiatives and features are received in the market in the coming months.