Apple sales may face inflationary pressures and weakening demand

Recently released Apple Inc's earnings report may show the best quarterly sales growth for the iPhone series this year, but it could also portend a difficult holiday season as smartphone demand slows in China and inflation hits multi-year highs.

According to Refinitiv, iPhone sales are expected to grow by 11% in the fourth fiscal quarter. Apple's sales growth is driven by consumers moving to premium Pro phones. However, analysts estimate that sales growth in the holiday quarter could slow to 2%.

As stated by Synovus Trust's Dan Morgan, the early days of the iPhone 14's product cycle indicated sluggish demand for original models and a much stronger demand for more expensive iPhone models. Morgan also added that he expects the weak consumer spending environment to affect earnings trajectory.

Apple's decision to keep prices of its latest Pro models unchanged is driving strong demand for the company's products, analysts say. These models are aimed at wealthier buyers who are less vulnerable to inflation.

According to TrendForce, the iPhone 14 Pro series boasts improved specifications and unit prices are the same as last year's models. Thus, pre-orders for the Pro series are extremely popular with consumers.