Apple slips even as Wedbush says iPhone demand up 'slightly better than expected'
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Apple (NASDAQ:AAPL) shares slipped on Wednesday even as Wedbush Securities said that demand for the iPhone is "holding up slightly better than expected," despite fears to the contrary.
Analyst Dan Ives, who rates Apple (AAPL) shares outperform with a $200 price target, noted that China's Covid-related lockdowns and supply chain issues, which resulted in Apple management quantifying it as a $4B-$8B hit to revenue, are expected to peak this quarter and subside in the next two quarters as the next iPhone gets ready to launch. 
"We believe the initial bogey and production plans for iPhone 14 should be up flat to slightly higher from iPhone 13 out of the gates which speaks to Apple's confidence that pent up demand for this next release remain healthy despite the jittery macro," Ives wrote in a note to clients, adding that he estimates Apple (AAPL) gained roughly 3% of market share in China over the past 12 months.
Apple (AAPL) shares fell less than 0.5% to $137.09 in premarket trading on Wednesday.
The company's large installed base, which has surpassed 1B iPhone devices and more than 1.8B iOS devices, is key to Apple's (AAPL) "unique advantage" over other tech companies, Ives added. The analyst also noted that roughly 240M iPhones have not been upgraded in roughly 3.5 years and that should help Apple (AAPL) over the next 12 to 18 months as the iPhone 14 is released later this year. 
Lastly, Apple's (AAPL) Services business, which some on Wall Street have worried about in recent days, is seen as a "key revenue stream" and likely to generate $80B in revenue this year, according to Ives. 
"On a growth and EBITDA basis, we believe Apple's services business is worth alone north of $1 trillion which coupled with the flagship hardware business makes the risk/reward very compelling at current levels," Ives explained, noting the company's growth story is "well intact" despite broader economic issues. 
On Tuesday, a prominent analyst said that Apple (AAPL) may have "failed" with the development of its own 5G modem chip, so it is likely to keep using Qualcomm's (QCOM) offerings through next year and possibly into 2024.