Zinger Key Points
- Apple's sales dipped in Q3 in China.
- Huawei's market share gains jumped by 42% in Q3 in China.
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Apple Inc's AAPL new intelligence features for the iOS 18, iPadOS 18, and macOS Sequoia 15.1 updates are expected to boost sales as it enters other geographies in 2025. However, Apple's Chinese competitor Huawei has announced heavy discounts for the New Year on their premium models, challenging the former's sales performance in this key market.
What Happened: Apple’s smartphone sales in China dipped 0.3% year-on-year in the third quarter of their current fiscal year. This resulted in just a 15.6% market share for Apple. Meanwhile, their main competitor, Huawei, saw a significant increase of 42% in market share during the same period, capturing 15.3% of the market. According to research by the International Data Corporation, Vivo took the top spot with a market share of 18.6%, up 21.5% year-on-year.
As Apple’s sales decline in China, Huawei, their fastest-growing competitor, has capitalized on the opportunity by announcing major discounts as part of JD.com’s ‘Super Brand Day' promotion. According to a post on Huawei’s Weibo account and a Reuters report, the company’s best-selling products will be discounted by up to 3,000 yuan (approximately $411) starting at 8:00 p.m. local time on Saturday and running through midnight on Sunday. The discounts will also apply to Huawei’s smartphones, headphones, watches, and tablets.
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Why It Matters: While it’s uncertain whether Huawei’s price cuts will prompt other Chinese smartphone manufacturers to follow suit, and whether Apple can still maintain strong sales performance by the end of the year. Here's what analysts are saying.
Wedbush Securities analyst Dan Ives has expressed optimism regarding Apple’s future, projecting a 26% potential appreciation in the company’s stock price. Ives attributes this growth projection to a multi-year iPhone upgrade cycle, driven by advancements in artificial intelligence. He believes this AI-driven cycle will propel Apple into a period of substantial growth extending into 2025.
According to Benzinga, AAPL has a consensus ‘buy’ with a price target of $245.27 per share based on the ratings of 30 analysts.
The highest price target out of all the analysts tracked by Benzinga is $325 issued by Wedbush Securities maintaining its ‘outperform' rating on Dec. 26, 2024.
Morgan Stanley reiterated its ‘overweight' rating with a target price of $273 apiece on Dec.13 2024 citing that the company’s AI initiative, is expected to significantly boost iPhone replacement cycles in fiscal 2025, potentially driving a surge in demand despite current subdued iPhone sales."
The lowest target price of $184 per share, maintaining a ‘underweight’ from Barclays was adjusted on Nov. 1, 2024. Barclays tempered its forecast due to factors like delayed ChatGPT integration in the iPhone 16, staggered international launches, and muted initial enthusiasm. Concerns around China’s market, regulatory hurdles for Apple Services, and the evolving AI strategy also contributed. The imminent release of Huawei’s 5G phone adds to the competitive pressure Apple faces, according to Barclays.
The average price target of $286 between Wedbush, Morgan Stanley, and Needham implies a 12.38% upside for the Tim Cook-led company.
Price Action: Shares were down 0.41% in premarket to $254.61 apiece, whereas the Invesco QQQ Trust, Series 1 QQQ declined by 0.25% at $521.19. On a year-to-date basis, Apple gained 37.71% this year whereas QQQ advanced by 29.78%.
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