Apple’s (AAPL) inventory set a new 2019 high on Wednesday, as traders cheered an earnings report displaying the tech giant’s wearables segment is more and more profitable — a shift which may be in danger amid slowing iPhone sales.
The corporate’s fiscal third-quarter earnings report mostly beat expectations; however, confirmed iPhone sales still behind. Still, the revenue it made on services and non-iPhone hardware, which includes Airpods and watches, are a rising a part of the corporate’s bottom line.
On Wednesday, numerous analysts spoke encouragingly about the shift towards services and other Apple-branded gadgets. Still, analysts at Deutsche Bank doubt that can fully decouple wearables and different products from its flagship device.
“Non-iPhone hardware revenues have exhibited mid-to-high teens [year over year] development for 3 straight quarters, however, we stay dubious that such progress can maintain over a multi-year time frame, particularly when wearables/services revenues stay tied to iPhone growth,” Deutsche Bank analysts wrote in their report.
The bank’s reasoning is straightforward. Units like the Apple Watch and Airpod want an iPhone to make use of them. If the latter’s sales are flagging, it’s an open query whether or not customers will continue to buy the former.
Within the newest period, new iPhone sales tumbled 12% in comparison with last year. Apple reported almost $26 billion in iPhone revenues this quarter, missing Wall Street’s estimates.
Analysts attribute the downturn in the iPhone’s fortunes to consumers holding on to their phones longer, slightly than upgrading with every new version.