Apple AAPL is set to unveil its new foldable iPhone at its “Surprise and Shine” launch event on Wednesday, the first major event under new CEO John Ternus. This will mark the tech giant’s entry into the growing foldable smartphone market.
The company is expected to showcase the foldable iPhone alongside its new Pro and Pro Max models. The foldable iPhone is expected to come with a price tag exceeding $2,000. However, for investors, the key question is not simply whether Apple can sell a foldable iPhone, but whether it can turn its late entry into a competitive advantage.
Despite the steep price tag, analysts expect strong demand for Apple’s first foldable iPhone. As quoted on Reuters, IDC expects that Apple could sell out its entire foldable iPhone production and secure as much as 40% of the niche market by the end of next year. If realized, such strong demand could strengthen Apple’s position in the premium foldable segment and provide a meaningful new growth opportunity.
Apple’s Late Entry Could Be an Edge
By entering the category after rivals have spent years addressing its engineering challenges, Apple has a potential late-mover advantage, having had the opportunity to address the engineering challenges that have affected the market. This late-mover advantage could allow the tech giant to address some of the category’s biggest shortcomings and potentially deliver a more refined product to consumers.
Foldable smartphones have faced several engineering hurdles, including durability concerns, hinge reliability and the visible crease that can appear on the display when the device is unfolded.
Analysts, as quoted on the abovementioned Reuters article, expect Apple to benefit from its later entry by potentially overcoming some of these challenges, with particular attention expected to be placed on developing a durable hinge that can withstand thousands of folds while minimizing the visible crease on the display when fully unfolded.
How the Foldable iPhone Could Boost Apple’s Growth
The foldable iPhone could represent much more than an addition to Apple’s smartphone lineup. A successful launch could establish a new premium product category for the tech giant, encourage existing iPhone users to upgrade and potentially attract Android users who are already interested in foldable devices. This could allow Apple to expand its already loyal customer base while creating another avenue for premium hardware growth.
As quoted on another Reuters article, IDC’s senior research director, Nabila Popal expects robust demand for the new Apple product, supported in part by the company’s ability to create a sense of exclusivity and premium appeal around its products. Popal forecasts more than $45 billion in revenues from Apple’s foldable iPhone by the end of next year, despite foldable devices accounting for only a single-digit share of the overall smartphone market.
Additionally, as per Citi analysts, as quoted on a Yahoo Finance article, Apple is projected to sell about 5 million units of the new device in the second half of this year, followed by another 2.3 million units in the first quarter of 2027. As quoted on the article, per Wamsi Mohan, analyst at Bank of America, the tech giant’s stock has risen in the 60 days following an iPhone launch 17 times since the original iPhone debuted in 2007, suggesting a historically favorable post-launch trend.
Into AAPL’s Stock Outlook
Apple currently has an average brokerage recommendation (ABR) of 2.02 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 42 brokerage firms.
Of the 42 recommendations deriving the current ABR, 22 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 52.38% and 7.14% of all recommendations, indicating that the majority of the analysts remain bullish. A month ago, Strong Buy made up 50%, while Buy represented 7.14%.
Based on short-term price targets offered by 37 analysts, the average price target for Apple comes to $328.75, representing an increase of 3.96% from its current level, with the forecasts ranging from a low of $240.00 to a high of $400.00. Currently, AAPL stock is priced at $316.22 (as of market close on Sept. 08) and has a Zacks Rank #3 (Hold), along with a Growth Score and Momentum Score of B.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ETFs to Capture Apple’s Growth Opportunity
Investors bullish on Apple's new product lineup can gain exposure through ETFs with exposure to Apple.
Global X PureCap MSCI Information Technology ETF GXPT has an exposure of 18.52% to AAPL.
Vanguard Information Technology ETF VGT has an exposure of 16.24% to AAPL.
Fidelity MSCI Information Technology Index ETF FTEC has an exposure of 15.83% to AAPL.
VanEck Technology TruSector ETF TRUT has an exposure of 14.54% to AAPL.
iShares Top 20 U.S. Stocks ETF TOPT has an exposure of 14.42% to AAPL.
Vanguard Morningstar Mega Cap Growth ETF MGK has an exposure of 13.19% to AAPL.
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Apple Inc. (AAPL): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).