Apple (AAPL, Financials) is balancing government subsidies with iPhone 17 Air issues in China, a new note from analyst Jefferies.
As these mixed elements play out, analysts forecast the shares of the IT behemoth will stay “range bound” in the short future.
Consumer subsidies have lately been established in China by recent projects; provinces of Jiangsu and Guizhou have discounted cellphones and other goods up to 15%. Especially, Apple items are part of Jiangsu’s agenda, which experts see as a calculated action by China to offset possible rises in U.S. taxes. Currently scheduled to expire at the end of 2024, the initiative may be extended should it be judged effective. Jefferies analysts observed that such projects may spread to other provinces, hence augmenting consumer demand.
But Apple’s thinnest model to date, the iPhone 17 Air, may have trouble in the Chinese market because it depends only on eSIM technology. With many customers depending on dual-SIM capability to gain from cheaper data plans without changing phone numbers, China’s legislative structure and market behavior mostly support physical SIM cards. Jefferies pointed out that this design decision would restrict the acceptance of the iPhone 17 Air in among Apple’s biggest regions.
Apart from these particular problems, Apple is facing more general difficulties like continuous trade conflicts between the United States and China and criticism over its search deal with Alphabet’s (GOOG, Financials) Google among antitrust probes. Although these elements might affect Apple’s activities, Jefferies analysts pointed out that they are unlikely to generate notable short-term variations in the stock price of the business.
Jefferies underlined that while tariff dynamics and government subsidies might affect the direction of the business, no one element seems powerful enough to propel significant movement in the stock.
Apple unveiled its iPhone 16 series in the fiscal fourth quarter. Particularly with the integration of Apple Intelligence, which is anticipated to drive a major upgrade cycle, analysts predict that the full effect of the new models will become evident in the next quarter.
Apple stock is last changing hands for $243.04, up 30.9% for the year thus far.
This article first appeared on GuruFocus.
