UBS Report: Weak Summer iPhone Demand — iPhone 17 May Not Prevent EPS Trend Lower in 2026

TradingKey - Ahead of Apple’s 3Q25 earnings release next Thursday, UBS has issued a warning: June iPhone demand collapsed, iPhone 17 order expectations are weak, and Apple’s earnings per share (EPS) could trend lower in fiscal 2026.

On Monday, July 21, UBS analysts reported that after two unusually strong months in April and May — driven by pull-forward demand amid tariff concerns — June iPhone sales may have plunged by 18% year-on-year.

Strong Q2, Weak Q3 Outlook

Despite the June slump, UBS expects Q2 iPhone shipments to reach 45 million units, up 3.4% YoY and above its previous forecast of 43.5 million.

Additionally, favorable foreign exchange tailwinds — from a weaker U.S. dollar — could boost Apple’s revenue and lead to better-than-expected results for the quarter.

However, the bank has raised its Q2 outlook but lowered its Q3 forecast, citing weaker-than-seasonal iPhone shipments that could reverse the typical post-launch growth trend.

UBS now expects Q3 iPhone shipments to fall to 50 million units, down from 52 million, with revenue projections cut from $47.7 billion to $46.0 billion.

iPhone 17 Won’t Save 2026 Earnings

The firm warned that the pull-forward effect from early demand will continue to weigh on iPhone sales through the remainder of 2025, until the launch of the iPhone 17 in Apple’s fiscal Q1 2026 (calendar Q4 2025).

The upcoming iPhone 17 lineup is expected to feature the most significant redesign in years, including:

• New design language and materials
• Updated dimensions
• Redesigned camera layout
• A balance of aesthetic and functional innovation

Despite these upgrades, UBS believes iPhone demand will remain muted over the next several quarters, expecting FY26 EPS estimates to trend lower.

In contrast, Morgan Stanley remains optimistic, forecasting strong sales across iPhone, iPad, and Mac, supported by favorable FX conditions and continued growth in Apple’s services segment.

Since the beginning of this year, Apple's stock price has still declined by about 15%, while the S&P 500 and the Nasdaq indices recently reached record highs during the same period.