These 5 Stocks Could Be the Biggest iPhone 16 Winners, and None of Them Is Apple

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The launch of an Apple iPhone always garners a lot of attention. After all, the company has sold over 200 million of the devices each year for the past three calendar years.

With the latest generation of the smartphone supporting a number of new artificial intelligence (AI) features, expectations for iPhone 16 sales are high. J.P. Morgan, for example, is expecting iPhone sales to rise more than 12% to 250 million units for Apple's fiscal 2025.

While this should help Apple, some of its suppliers could benefit even more.

Arm Holdings

One of the big winners from strong iPhone 16 sales will likely be Arm Holdings (NASDAQ: ARM). With its technology in 99% of smartphones, Arm benefits from any increase in global smartphone sales.

The iPhone 16's new A18 chip is based on Arm's newest V9 architecture. The iPhone 15 launched last year, meanwhile, was powered by its A16 chips and A17 chips for its Pro models, which were both based on Arm's older V8 architecture. This is important because Arm has said that its V9 architecture carries almost double the royalty rate compared to its V8 architecture.

As such, Arm is set to benefit from not only increased iPhone unit sales, but also from much higher royalties. This makes it one of the biggest iPhone 16 winners.

Broadcom

While investor attention around Broadcom (NASDAQ: AVGO) has mostly been around its data center networking equipment and customized AI ASIC (application-specific integrated circuit) chips, the company is also set to benefit from the iPhone 16. This is good news for Broadcom as much of its business outside of AI and its recent VMWare acquisition have struggled.

However, the entire iPhone 16 lineup will incorporate the new Wi-Fi 7 standard, which will be powered by Broadcom's integrated RF modules. Broadcom also provides other wireless components to Apple, so any increase in iPhone sales should benefit Broadcom's sales.

Broadcom will likely remain more of an AI infrastructure story than a smartphone story, but an improvement in some of its other struggling businesses could go a long way in helping its stock as well. Its wireless revenue grew only 1% last quarter to $1.7 billion and is expected to be flat year over year in the current quarter, but the iPhone 16 looks poised to power this part of the business soon.

Image source: Getty Images.

Qualcomm

Apple and Qualcomm (NASDAQ: QCOM) have not always had the best relationship, with the iPhone maker deciding at one point back in 2017 to stop paying it royalties. Meanwhile, there has been speculation of Apple looking to replace some of the Qualcomm's G5 modems next year. The two companies signed an extension to use its modems until 2027, and there have been reports of Apple struggling to produce its own 5G modems, so at this point that is still just speculation.