iPhone grabs top share in China and analyst negativity abates. What’s going right at Apple
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After a rough early start to 2024 and lots of analyst negativity, Apple has turned the corner. Wall Street mentions are getting brighter, and the tech giant just added the title of top smartphone maker in China to its long list of firsts. The iPhone captured a firm-record 17.3% market share in China last year, according to the International Data Corporation’s quarterly phone tracker report . That’s up from a 16.8% share in 2022. Huawei spin-off Honor came in a close second at 17.1% last year, followed by two other Chinese providers Oppo at 16.7% and Vivo at 16.5%. The top four 2023 market-share holders in China were only separated by less than 1 percentage point, showcasing stiffening competition between Apple and domestic manufacturers. “Apple’s climb to the top spot in 2023, especially in light of renewed competition from Huawei and the soft spending sentiment, marks a tremendous success for Apple,” IDC analyst Arthur Guo said Thursday. “Apple achieved this thanks to timely price promotions in its third-party channels, which stimulated demand.” In hopes of keeping that No. 1 spot in China, Apple made the rare move of offering limited-time iPhone 15 discounts there during this month. Last week, IDC crowned Apple as the biggest smartphone maker in the world , dethroning Samsung for the first time ever. Samsung’s Android-based smartphones have been No. 1 since 2010. All of this furthers our belief that iPhone momentum will continue despite a slew of Wall Street warnings at the start of 2024 about waning sales. Barclays analysts, for example, issued a rare sell call on Apple on Jan. 2, citing softening iPhone demand. Apple shares plummeted just over 3.5%. (While we remained bullish on tech, we did trim Apple to right-size the position after last year’s strong rally before the opening bell that day.) After that, there were a slew of other recent downgrades from Piper Sandler and Redburn Atlantic. And, just about two weeks ago, we reported that the Street hadn’t been this cautious on Apple stock in years. Club holding Microsoft even dethroned Apple briefly on Jan. 11 as the world’s most valuable company. The two companies remain neck and neck. AAPL YTD mountain Apple (AAPL) year-to-date performance Fast forward to this week, and it looks like Apple’s finally getting the reprieve it needs. The stock turned positive for the year as of Monday’s close. After gaining 48% in 2023, Apple shares are now up roughly 1% year to date. Some of the more recent Wall Street commentary has been more positive, too. Bank of America added the Big Tech name to its “US 1 List,” on Tuesday. This is a collection of the firm’s self-described best investment ideas among its buy-rated stocks. Then, on Wednesday, Goldman Sachs said it sees a solid setup for Apple later in the year, with growth acceleration in Services. The analysts also expect in-line results when Apple reports quarterly results next week. While the IDC called its phone tracker data preliminary and subject to change, we’re encouraged by any sign that the firm is maintaining its status as a premium brand in China — the world’s second-largest market for smartphones and a country that accounts for nearly 20% of overall Apple revenue. However, we’re not ruling out that China could soften in the year ahead. Either way, Jim Cramer said this week that Apple’s expansion into emerging economies will offset any weakness in China. India, Indonesia and Brazil, for example, are each a “meaningful market” for the iPhone creator, according to Jim’s commentary in Wednesday’s January Monthly Meeting for Club members. Remember, Apple CEO Tim Cook told CNBC last year that India presents a “huge opportunity” for the firm. Apple is putting more resources into these markets to diversify the company’s supply chain and grab smartphone share in less saturated markets amid uncertain relations between the U.S. and China. We think Apple should be able to win over more prospective customers because of its device quality and robust ecosystem. This ensures customer loyalty for Apple — and subsequently, boosts the company’s crucial high-margin Services segment as more users utilize their products. “Alas, only China matters to the bears and I say, run the clock out on that market. It isn’t as important as you think,” Jim concluded in the Club meeting. A catalyst that Jim has been championing that’s only just starting to gain traction is Apple’s Vision Pro mixed reality headset. Preorders began last Friday , and the demand for the $3,500-and-up device was strong. After testing it out last summer, Jim has been bullish about how the Vision Pro could enhance the viewing of movies and live sports as well. To be sure, the headset, which goes on sale Feb. 2, likely won’t have a material impact on shares for several quarters. We are interested, however, to see how developers start using the device. (Jim Cramer’s Charitable Trust is long AAPL, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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ANKARA, TURKIYE – JANUARY 01: In this photo illustration, logos of Apple are displayed on a computer screen in Ankara, Turkiye on January 01, 2024. (Photo by Berke Bayur/Anadolu via Getty Images)
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After a rough early start to 2024 and lots of analyst negativity, Apple has turned the corner. Wall Street mentions are getting brighter, and the tech giant just added the title of top smartphone maker in China to its long list of firsts.
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