Despite the widespread supply chain issues and other factors affecting the tech industry, iPhone demand this quarter has thus far remained remarkably resilient.
The market analysts said in a new investor note that Apple's flagship devices had been holding up well despite compression across the board in tech and fears of a growth slowdown, as reflected in Apple's reduced share.
The albatross for the June quarter in our investor conversations over the past month have naturally been the Covid lockdowns in China which will negatively impact revenue by between $4 billion and $8 billion as a headwind according to Cook & Co.'s guidance given last month.
As of now we believe iPhone demand is holding up better than expected (despite the various supply issues that have plagued Apple and the rest of the tech sector) and are trending better than management's guidance thus far in the quarter.
Apple said last month that it would be difficult to make enough product to satisfy strong consumer demand as the year progresses, and that this would affect their June quarter revenue.
The June quarter should be the peak time for supply chain issues because of the launch of the Apple phone.
We believe the initial bogey and production plans for iPhone 14 should be up modestly from iPhone 13 out of the gates which speaks to Apple's confidence that pent up demand for this next release remain healthy despite the jittery macro.
The stickiness of Apple's upgrade cycle is being underestimated by investors and Apple's installed user base will be key to sales this year.
Apple has an advantage over its competitors that will allow it to account for roughly $80 billion of annual revenue this year and grow at a double-digit clip into the future.
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