The iPhone 16 Could Be Better Than You Think

Editor's note: People haven't been rushing to buy the newest iPhone for the past two years. But according to Marc Chaikin – founder of our corporate affiliate Chaikin Analytics – this could be the year that Apple's sales take a big jump forward. In this issue, originally published in the free Chaikin PowerFeed daily e-letter, Marc explains what the financial media is getting wrong about this story...

Five years ago, the financial media feared a "grim" future for Apple (AAPL)...

The tech giant released a poor earnings report in January 2019. Then, the scary headlines began.

Here's what Business Insider said after Apple's earnings release at the time...

It got worse...

Apple's next report that spring gave the media even more ammo to fear the worst for the company. As BBC put it succinctly in this headline from May 1, 2019...

News service Bloomberg tends to avoid sensationalism in its headlines. But even it couldn't resist spotlighting Apple's struggles ahead of the October 2019 earnings report...

These headlines were all scary at the time. And the media wasn't lying about Apple's numbers...

Sales of the company's iconic iPhone fell nearly 14% in 2019. That remains the biggest one-year drop in sales in the smartphone's history.

However, like the media often does, it went too far in its quest for "clicks"...

The coverage painted the sales decline as a looming disaster for Apple. But it wasn't.

As always, context matters...

Apple's 2019 numbers only looked weak compared with 2018. Sales of the iPhone had jumped 18% that year. They'd hit a then-record high of about $165 billion.

After such a great year, it makes sense that iPhone sales would pull back a bit. The media feared the worst. But a sales decline doesn't always signal the end of the world.

In fact, Apple's iPhone sales in 2019 still topped the 2017 numbers.

Millions of people simply loved their existing iPhones from the 6, 7, and 8 series at the time. And the newest models – the XS and XR – didn't entice enough folks to pay for an upgrade.

But that's OK...

Apple's iPhone is as close to a necessity as you'll find in our tech-centric world. And it was only a matter of time before people would want a new model.

You see, tech products go through "cycles"...

For example, VCRs exploded in popularity in the 1980s. By the late 1990s, sales plunged as folks switched to DVD players. And then DVD players went through their own sales boom.

Today, we're seeing the same process continue... just over a much shorter time frame.

Now, products go through different generations. If the popularity of one model booms, a company's sales tend to stagnate for the next few years. That's because folks are still using the popular model and don't want to upgrade yet.

It's exactly what happened with the iPhone...

Sales fell another 3% in 2020. But then, they exploded almost 40% higher in 2021. Then, they jumped 7% more in 2022. You can see what I mean in the chart below...

In other words... Apple's future was nowhere near as "grim" as the media feared.

Sure, the company endured a short-term slump in 2019 and 2020. But the next year, sales ripped higher. And over the long run, the trend is still up.

We can see that uptrend through the three-year average of iPhone sales. That's the orange line in the above chart.

Here's why this story about Apple's past is so important...

A similar setup is developing right now.

Sales of the iPhone surged in 2021 from the year before. But they've stayed mostly flat over the past two years. And the media is getting worried again about the company's latest numbers...

In the second quarter of this year, iPhone sales dropped more than 10% year over year. That's the steepest quarterly decline since the end of 2020.

But to me, the recent stagnation signals an opportunity...

A ton of folks will soon want to upgrade their iPhones. That means we're about to enter the next "up" phase of the iPhone's product cycle.

Many people still use an iPhone 12 today. That model came out in late 2020. And it made up 73% of iPhone sales in 2021 (about 10% more than the iPhone 11 the previous year).

The company last experienced a big sales jump three years ago. That's usually how long folks wait to get the next model.

The timing is perfect, too...

Apple unveiled its new lineup of iPhone 16 models at its annual release event earlier this month.

These smartphones will feature a ton of upgrades – including new artificial-intelligence features. Enthusiasts also like the bigger screen size, improved battery life, and new camera controls.

The iPhone 16's launch is obviously great news for Apple.

And now, the stock has recently flipped to a "bullish" rating in my Power Gauge system. This is a tool we use at Chaikin Analytics to gather a wide array of investment fundamentals, technicals, and more into a simple, actionable rating such as "bullish," "neutral," or "bearish."

Take a look at what it's saying now...

As you can see, Apple has held a "neutral" rating for most of the year. However, with the recent "bullish" rating, that means the Power Gauge now sees upside ahead for the stock.

Folks, I'll be keeping an eye on Apple. And I recommend you do the same.

Good investing,

Marc Chaikin

Editor's note: Marc also has his eye on another opportunity underway in the markets...

In short, it has to do with potential massive gains – for certain stocks – in the wake of the Federal Reserve's historic interest-rate cut. Sure, many investors are now expecting big gains overall... but the market implications surrounding the cut aren't as simple as you might think.

That's why Marc just went on camera to share all the details... and to explain the exact moves you should make to position yourself now. Click here to watch his presentation.