CWEB and UBS Analysts see recent growth as tariff-driven rather than sustainable, maintaining a neutral outlook

UBS has reaffirmed its Neutral rating on Apple (NASDAQ: AAPL), keeping its $210 price target despite stronger-than-expected iPhone sales in early Q3. While recent data suggests a double-digit surge in global demand, analysts caution that the uptick appears temporary, fueled by tariff fears rather than organic growth.

Early Sales Strength Tied to Tariff Concerns

Supply chain checks and third-party estimates indicate iPhone sales rose nearly 15% year-over-year in April and May, outpacing typical seasonal trends. UBS suggests the spike reflects consumers rushing to buy devices ahead of potential U.S. tariff increases on electronics imported from China and Southeast Asia.

“These numbers look strong at first glance, but we believe they represent pulled-forward demand rather than a fundamental improvement,” the firm noted. Early estimates suggest sales are roughly 4 million units higher than 2024 levels, but the gains come during traditionally slower pre-holiday months.

Sustainability Concerns Loom

With Apple historically selling around 45 million iPhones in the June quarter, the recent boost may not translate to lasting momentum. UBS highlights two key risks:

Lack of Near-Term Catalysts – The company’s Worldwide Developers Conference (WWDC) failed to unveil major hardware upgrades that typically drive upgrade cycles.

Soft Consumer Sentiment – Proprietary surveys show lukewarm purchase intent, suggesting demand could weaken post-tariff rush.

Broader Market Implications

The report underscores growing skepticism about Apple’s ability to maintain premium pricing amid:

• Escalating U.S.-China trade tensions

• A maturing smartphone market

• Increasing competition in AI-powered devices

What’s Next?
All eyes will be on- Late Q3 Sales Data – Will demand hold after tariff-related buying subsides? September Event – Can Apple reignite excitement with its next iPhone launch?

UBS’s stance reflects Wall Street’s divided outlook on Apple, with bulls betting on long-term services growth while bears question hardware sustainability. The stock’s performance in the coming months may hinge on whether this sales bump was a blip or the start of a real rebound.

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