Apple shines, PC business declines and Gen Z goes iPhone
Morgan Stanley Apple analyst Erik W Woodring is out with the latest client notes covering the global PC industry. The top line takeaway? Things remain gloomy, the lowest part of the trough may be coming, and Apple is the best positioned PC market stock.
One more slump before uptime?
It’s a tough crowd. Woodring whittled down the global PC market forecast to 249 million units from 261 million this year. He also predicts news of dips in both HP and Dell earnings over the next week. At the same time, he predicts the lowest point in the market may pass during the current quarter.
Among other insights, the analyst warns supply chain and channel checks suggest that the combination of weak consumer demand, drastically softer enterprise demand, economic weakness in the US and Europe, and elevated channel inventories globally mean shipments will hit their lowest rate since 2006, 5% down on prior forecasts. He also notes some price competition as companies cut PC prices to grab what share remains.
“Apple remains our top pick amongst the global PC OEMs,” he said. While most PC makers will grapple with a 15% downside, Apple has a 15% upside to its price target he said. Dell has an 11% opportunity, he warned. The result? Morgan Stanley’s Apple price target currently sits at $175 per share.
[Also read: PC makers unhappy at Apple’s big bright Mac future]
What of the future?
Of course, Apple’s Mac renaissance can’t continue, can it? It might. Perhaps the best intimation of that future comes from a second report. In that report, author Patrick McGee notes that Apple has “captured” Gen Z in the US to the extent that people born after 1996 now make up 34 percent of all US iPhone owners.
That data point essentially shows that Apple now has a commanding slice of hearts and minds across the next generation.
And as Shannon Cross at Credit Suisse pointed out, that means these people are more likely to purchase other Apple products, Macs, iPads, AirPods, and the company’s future product families, too.
Apple sells 26 iPads, 17 Apple Watches and 35 pairs of AirPods for every 100 iPhones sold, Canalys says.
That bodes well for the AR glasses we all still think the company has coming to us later this year.
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