Google Search Trends Give Little Clue As To Whether New iPhones Are Gaining Traction

Google Search trends is usually a good indicator to gauge demand for a product, but surprisingly this isn't the case for Apple Inc. AAPL's iPhone launch, analysts at UBS argued in a report.

Taking a look at Google Search trends could be a waste of time because search volume has been steadily declining since the release of the iPhone 5, analyst Steven Milunovich noted. There is a simple explanation for this: the majority of iPhone buyers are merely existing customers looking to upgrade their older device.

"The need to search for 'iPhone' likely is diminishing as the market matures," the analyst explained. "We think it will take a few more months before data points are meaningful. Furthermore, the data excludes China, where we expect strong growth next year."

In fact, upgrade purchases is expected to account for 70 percent of total iPhone volume in fiscal 2018, which marks an uptick from 60 percent in fiscal 2017 and 55 percent in fiscal 2016, Milunovich stated.

Meanwhile, search interest between the iPhone 8 and iPhone X is evenly split which should be seen as an optimistic sign based on the assumption that some of the search for the iPhone X stems from curiosity, the analyst highlighted.

Milunovich maintains a Buy rating on Apple's stock with an unchanged $180 price target.

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