CNBC’s “Squawk Box” team discusses demand for Apple's iPhone 17 with Wamsi Mohan, senior IT hardware analyst at Bank of America Securities.

Cupertino

Analysts tracking Apple's iPhone 17 report strong demand across all models, with particularly extended lead times for the baseline Pro model, especially in China. This increased demand in China is attributed in part to the unavailability of the iPhone Air and certain subsidies for the base model. 

Apple's business model continues to shift from hardware cycles to sustained earnings growth, supported by its large installed base and expanding high-margin services. The company is expected to see rising gross margins, potentially reaching 50 percent, driven by product mix, vertical integration, and favorable currency effects. Analysts also highlight the potential for Apple to benefit from advancements in artificial intelligence, which could further boost its earnings and share price over time.

Report: Strong orders for iPhone 17

Wamsi what are your channel checks showing you just in terms of demand for this phone. Good morning Becky. Thanks for having me. Yeah absolutely. We track lead times and ship times as they are available across different carriers as well as Apple's own distribution channels globally. And what we see is that the indeed the pro and pro max have similar lead times to prior years whereas the baseline pro model is really extended. And that extension is particularly prominent in China. Now that could be happening partly because the iPhone air is not available in China because of some reasons. And so the baseline model has incremental demand in China. So also there is the element of subsidy that in China the iPhone base model will qualify for that. Some versions of it will qualify for that as well. So we think that the demand is quite strong not just for the base model but actually for all models across the board. We think the supply of the iPhone air is quite high which is part of the reason why the ship times of that are not extended. But in general this cycle is actually turning out to be somewhat better than what most people expected going in into this iPhone 17 cycle as such. You are a hardware analyst and I know watching demand for the phones is an important part of Apple's share price but it feels like it's less and less of an important part of what makes up the share price these days. There's so many questions about A.I. so many thoughts on the the Apple you know Apple economy and the Apple sphere. Once you're in it it's hard to get out of it. So how do you really make your determinations for where you think Apple shares are headed. Yeah that's a great question. Look I think that Apple as a company the story has really morphed from one of being a boom bust hardware cycle to one of sustained earnings growth over time. And where does that really come from. It comes from a few core capabilities that Apple has including vertical integration where they've always been really good at developing their own silicon as well as their software. Now on top of that when you look at the install base of Apple built on these great devices that foundation of over two billion devices in aggregate right globally when you take in all the different products and then run services on top of that which are extremely high margin. You set up the stage for Apple to be one of those companies which at a 400 billion dollar revenue scale is still improving gross margins. We actually think in the near term gross margins are headed higher not just because of mix and vertical integration but also because of FX tailwinds. And so when you think about all of those and the services mix improving of course you can get Apple to be a company that's going to be scaling margins north of 50 percent gross margins. And if you go back 10 years when Apple's multiple was maybe in the low teens the gross margins for the company were at 35 percent and people were worried that they were going to compress to 30. Instead they've gone to 45. And now we think that they're headed to 50. So this is just an amazing company which has built this platform that is extremely robust in the age of A.I. which is part of your question Becky. I think it's important to recognize that A.I. at the edge will be dominated first by smartphones. Apple will be a key player of A.I. at the edge. And in our opinion actually this unlocks a trillion dollar town on top of what Apple currently has. And that is going to be a meaningful meaningful driver for the stock over time. So as we look at the earnings power we think that you know 850 or so for next year going to 930 or so the following year. And if things go right on A.I. for Apple it could easily exceed three hundred dollars and much higher than that over time. Your price target right now is 270 dollars. What is that time frame or are you changing that to over three hundred dollars now. No our our price target is 270. That's over the next 12 months. As we look out further and as you get into next year the earnings power of this is going to catalyze from 850 and grow to more in the 930 or so range which is where we're published. So we think that there is upside as we go over the next 12 months as people start to recognize the potential of A.I. which is we don't think embedded in the stock price currently.

President Donald Trump urged Attorney General Pam Bondi in a social media post to move forward with cases against several people connected to the U.S. government. CBS News justice correspondent Scott MacFarlane has more.

Washington

Trump urges Pam Bondi to go after his political foes

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Moscow

Ukraine Invasion

Russia denies violating Estonian airspace

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Glendale

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Lisbon

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Nashua

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Phoenix

Trump, others remember Charlie Kirk at memorial service

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Tel Aviv-Yafo

Middle East Conflict

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Britain, Canada and Australia all recognize Palestinian state

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New York

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London

Travelers stranded as cyberattack disrupts major European airports

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Manhattan

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Melbourne

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Kyiv

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Heathrow Airport

Flight chaos as UK, European airports hit by cyberattack

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Tallinn

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Tehran

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Caracas

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Chicago

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Breakdown