What Would Weak iPhone Demand Do To Apple Stock

Apple (AAPL) shareholders are facing concerns that the iPhone 18 Pro is falling short of sales expectations. On October 9, Nikkei Asia reported that Apple instructed certain suppliers to scale back component production due to soft demand. This development matters to investors, as the iPhone remains the largest business segment for the company. So how much is actually known about demand for the new phone?

What Is Known About Apple's iPhone 18 Pro Demand?

Concrete information remains sparse, and early indicators point in both directions. UBS data published on October 9 showed that average delivery waits for the iPhone 18 Pro shortened by about six days over a week. Those figures have added to concerns regarding consumer interest. Yet reports present a different picture in other markets. On September 23, CNBC noted that buyers queued outside Apple locations in India, and demand there was stronger than it was for the iPhone 17.

Apple has not disclosed official sales numbers for the device. The phone launched on September 18, meaning the company has yet to report a quarter capturing those transactions. During its July 30 earnings call, which took place before the new phone went on sale, management stated that the iPhone was selling better than they had expected.

How Much Would A Weaker iPhone Take From Apple?

Softness in this product line would drag on growth in Apple's largest division. The segment generated $209.6 billion in fiscal 2025, accounting for half of the company's revenue. In the June quarter, iPhone revenue reached $54.3 billion, climbing 22% from a year earlier.

If the division erased that entire year of growth, iPhone revenue for the June quarter would drop to about $44.5 billion. Apple posted total revenue of $109.4 billion in that period. A setback of this scale would weigh on overall sales without fundamentally altering the business structure.

The broader risk lies in the share price. Apple stock currently trades at 38.8 times earnings, compared with a multiple of 21.9 for the S&P 500. That premium valuation appears to assume continued growth. Furthermore, the shares have experienced severe declines in the past: the stock fell 30% during the 2025 tariff shock, compared with a 19% drop for the S&P 500.

Apple Has Services And Spare Cash Behind The iPhone

Should the iPhone weaken, Apple still relies on its growing Services unit, the second-largest segment of the company. Services recorded $109.2 billion in fiscal 2025, an increase of 13.5% from the previous year.

The company also maintains significant liquidity. It generated $136.7 billion of free cash flow over the past twelve months. During that time, Apple spent $82.2 billion on share buybacks, leaving the program comfortably covered by the cash the business produced.

When Will Apple Show How The iPhone Is Selling?

The first concrete signs of iPhone sales performance will arrive with the upcoming earnings report for the September quarter. Management forecast mid-teens growth in iPhone revenue for that period while expecting supply constraints to affect the product line. Consequently, the actual growth rate for the segment is the first number to watch.

During the July 30 call, management gave no guidance beyond September. The official outlook for the December quarter, which will be the first full period with the iPhone 18 Pro on sale, is the other critical metric to monitor at that report.

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