Mizuho's Positive Outlook on Apple Stock
Mizuho desk analysts have expressed a favorable sentiment toward Apple (NASDAQ: AAPL) stock, branding it as an 'out of favor long idea'. This suggestion comes amid concerns about declining iPhone unit sales, which the analysts believe are already factored into current stock prices. They anticipate the 2025 sales of Apple's iPhones, particularly with the introduction of the iPhone 16, to show relative stability—projecting a year-over-year sales change that remains flat or dips slightly into the low single digits. This projection is likely to be more optimistic than what many analysts have feared.
Long-Term Recovery Expected
The analysts predict a recovery for Apple stock after a challenging period that is expected to last until March 2025. This anticipated rebound is anticipated to be bolstered by pivotal moments such as the unveiling of a new iOS in June and the highly awaited launch of an AI-advanced iPhone 17 scheduled for September 2025. Such advancements could significantly enhance the overall user experience, further driving sales and customer loyalty.
Sales Forecasts and Production Estimates
Mizuho analysts now adjust their expectations downward, forecasting a 6% decline in iPhone production for 2024. Their revised estimate for production stands at 220 million units, reflecting a cautious approach towards the upcoming iPhone 16 model. However, they predict a sharp recovery in 2025, estimating an 8% increase in unit sales, reaching up to 239 million units, fueled by the launch of the new iPhone SE and expectations surrounding the iPhone 17. Looking ahead to 2026, analysts believe that unit sales could possibly hit around 250 million.
Impact on Supply Chain and Future Developments
Mizuho's projections indicate that the iPhone 17 is likely to reach sales of 97 million units in 2025, an impressive 10% uplift compared to the forecast for the iPhone 16. This favorable forecast is also seen as a positive indicator for DRAM manufacturers, particularly Micron Technology (NASDAQ: MU), as upcoming models, including the iPhone 16/Plus and new SE4 variants, are expected to feature an increase in DRAM capacity from 6GB to 8GB.
Moreover, there are forecasts that the iPhone 17 Pro and Pro Max models could include even more memory, potentially rising to 12 or 16 GB, thanks to anticipated drops in memory prices next year. This trend of enhanced specifications positions Apple to potentially capture a larger share of the premium smartphone market.
Transition to In-House Technology
The analysts also highlight that Apple plans to transition to internal modem chips starting with the iPhone 18, moving away from modems supplied by Qualcomm (NASDAQ: QCOM). This strategic shift is expected to be completed across all iPhone models by the time the iPhone 18 makes its debut. This move not only represents a significant step in enhancing Apple's control over its technology supply chain but is also likely to yield cost benefits in the longer term.
Future Innovations: Foldables and AI
Anticipating future innovations, Mizuho analysts predict that Apple could unveil a foldable iPhone by 2027, which may trigger increased investments in G6 OLED panels necessary for such devices. Additionally, the introduction of new AI-powered features within iOS is expected to enhance the upgrade cycle for devices, encouraging customer upgrades and replacements starting as early as the iPhone 17 release.
Negativity in the Market
Despite the optimism surrounding Apple's future products, there remains a prevailing negativity from the buy-side regarding AAPL and its supply chain. Analysts note that the current sentiment points to a crowded short position in the stock, with many expecting low single-digit growth for iPhone unit sales in 2025. Contrasting this view, sell-side analysts had previously forecasted a 5% growth, which they now see trending toward stagnation.
In a separate analysis, Mizuho Asia analysts have indicated that Apple's roadmap emphasizes enhancements in AI services and interrelated components such as application processors, cameras, sensors, and DRAM technology. They foresee a decline in DRAM prices early in 2025, which should aid in reducing cumulative costs across Apple's supply chain.
Crucial future advancements are set to include the introduction of in-house modem capabilities by 2025, as well as flexible OLED screens by 2027. Although AI-driven services may encourage more frequent device upgrades, analysts caution that evaluating the full impact of these innovations on profitability remains critical.
Frequently Asked Questions
What is Mizuho's outlook on Apple stock?
Mizuho analysts view Apple stock as a potentially positive investment, emphasizing an expected recovery driven by new product launches and AI integration.
How are iPhone sales projected for 2025?
Mizuho predicts that iPhone sales in 2025 will likely see an 8% increase, largely due to the new iPhone SE and anticipated iPhone 17.
When is Apple expected to introduce its internal modem technology?
Apple is expected to transition to its internal modem technology starting with the iPhone 18, with completion for all models by its release.
What changes are expected in iPhone memory specifications?
Upcoming iPhones, including the iPhone 17 series, are anticipated to include more DRAM, potentially increasing from 6GB to 8GB, with Pro models possibly featuring up to 16GB.
What future device does Mizuho predict from Apple by 2027?
Mizuho analysts expect Apple to launch a foldable iPhone by 2027, representing an innovative leap in their product lineup.
