Mizuho's Positive Outlook for Apple Stock
In a recent analysis, Mizuho analysts shared their perspective on Apple (NASDAQ: AAPL) stock, referring to it as an 'out of favor long idea.' They argue that the current negative headlines concerning declining iPhone sales have already impacted the stock price, suggesting that the market has factored in these challenges. Despite skepticism surrounding iPhone unit sales, the analysts foresee fiscal 2025 iPhone sales remaining stable, particularly for the anticipated iPhone 16, with projections showing revenues could be flat or drop slightly in low single digits when compared to the previous year. This outlook is considerably more optimistic than some bearish expectations circulating in the industry.
Future iPhone Releases and Sales Predictions
Looking beyond immediate challenges, Mizuho analysts speculate that the Apple stock could experience a rebound after a tough period extending until March 2025. Anticipated catalysts for this potential upturn include the unveiling of a new iOS version in June and the upcoming release of the AI-enhanced iPhone 17 planned for September 2025. The analysts expressed confidence, stating, “Patience will be rewarded, and the near-term downside risk is limited given the overly negative sentiment from investors.”
Revised Unit Production Estimates
Mizuho has lowered its forecast for iPhone unit production in 2024 with a projected decline of 6%, adjusting the estimate from 230 million units to around 220 million units for the iPhone 16. Nevertheless, analysts predict a strong recovery in 2025, expecting an increase of 8% to reach around 239 million units, buoyed by the launch of a new iPhone SE and the highly anticipated iPhone 17. Further projections for 2026 indicate even greater growth, estimating that iPhone unit sales could soar to about 250 million.
Hardware Advancements and Industry Impact
Mizuho's analysis includes insights on the expected performance of the iPhone 17, projecting sales to hit approximately 97 million units in calendar year 2025, which is around 10% higher than expectations for the iPhone 16. This robust demand could also spell good news for suppliers like Micron Technology (NASDAQ: MU), as the new models are expected to incorporate an increased amount of DRAM, with the iPhone 16/Plus and SE4 models likely featuring 8GB, a modest upgrade from the 6GB used in the previous generation. Premium models such as the 17 Pro & Pro Max may offer even more RAM, potentially reaching 12 or 16 GB in response to decreasing memory prices.
Shift in Modem Supply and Future Innovations
Moreover, analysts anticipate that Apple will begin utilizing its internal modem chips for future models, starting with the iPhone 18. This strategic shift will allow Apple to reduce reliance on Qualcomm (NASDAQ: QCOM) for modem technology, with the complete transition expected by the time the iPhone 18 is released. In addition to this shift, Mizuho indicated that a foldable iPhone might be introduced in 2027, a move that could stimulate significant investments into next-generation G6 OLED panels.
The Role of AI in Apple's Future
Apple's integration of new AI features in upcoming iOS updates could play a crucial part in enhancing customer upgrade cycles, beginning with the iPhone 17. Mizuho noted that feedback from the buying side has been overwhelmingly negative regarding AAPL and its supply chain, indicating market sentiment has shifted. They believe that this prevailing negativity has created an environment where unit estimates for iPhone sales in 2025 may be more pessimistic than necessary, historically challenging the stronger growth potential seen with other releases.
DRAM Market Trends and Cost Management
In a separate note, Mizuho's analysts from Asia addressed Apple's broader iPhone strategy, highlighting its focus on innovation in AI services and associated components such as application processors, cameras, and sensors. They predict a significant decrease in DRAM prices by early 2025, which could alleviate some cost pressures throughout Apple's supply chain. Notably, the move towards in-house modem chips slated for 2025 and foldable OLED technology aimed for 2027 represent key milestones in Apple's evolving product roadmap. While new AI capabilities could drive an increase in device upgrades, analysts noted the necessity for a thorough evaluation of the complete benefits these services may bring.
Frequently Asked Questions
What did Mizuho analysts say about Apple stock?
Mizuho analysts indicated that they see Apple stock as an 'out of favor long idea' due to current market sentiment.
What sales figures are projected for the iPhone 16?
Analysts anticipate iPhone 16 sales will remain stable with projections indicating flat to low single-digit declines.
When is the expected launch of the iPhone 17?
The iPhone 17 is expected to launch in September 2025.
What is the anticipated impact of AI features?
New AI software features in iOS could enhance device upgrade cycles starting with the iPhone 17.
What market changes are expected in the DRAM sector?
Mizuho analysts forecast a downturn in DRAM prices by early 2025, impacting costs across Apple's supply chain.
