Apple Has Taken the Lead in China’s Smartphone Market. What Could This Signal for AAPL Shares by 2026?

Apple Regains Leadership in China’s Smartphone Market

After nearly two years of trailing behind competitors like Huawei, Apple has reclaimed its position as the leading smartphone brand in China. This resurgence is fueled by a remarkable 28% increase in shipments during the fourth quarter, marking a significant comeback for the iPhone maker.

Data from Counterpoint Research highlights robust demand for Apple’s iPhone 17 lineup in the final quarter of the year. However, the iPhone Air struggled to gain traction, largely due to its delayed release in China and a minimal market share.

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Analyst Ivan Lam noted, “The iPhone Air’s late arrival and the balance between its slim profile and features led to a slow initial response. Nonetheless, it represents a pivotal step for Apple, both in terms of design innovation and its impact on the future of eSIM smartphones in China.”

Huawei, which overtook Apple in early 2024, slipped to fourth place as its shipments declined by 13.7%. In the fourth quarter, Apple captured 21.8% of the Chinese smartphone market, followed by Oppo at 15.8%, Vivo at 15.7%, and Huawei at 14.6%.

The challenge now lies in whether Apple can sustain this momentum. For the full year, Huawei maintained the top spot with a 16.9% market share, narrowly edging out Apple’s 16.7%. However, Apple’s annual growth in China was 7.5%, significantly outpacing Huawei’s 1.7% increase.

Will Apple’s renewed strength in China alter the outlook for its stock?

Overview of Apple Inc.

Based in Cupertino, California, Apple is a global technology powerhouse best known for revolutionizing the smartphone industry with the launch of the iPhone. This flagship device transformed mobile communication by integrating calling, messaging, music, and internet access into a single touchscreen device, while also connecting users to the App Store ecosystem.

Although the iPhone remains Apple’s primary revenue driver, the company’s portfolio also includes Mac computers, iPad tablets, wearables like the Apple Watch, and a highly profitable Services division encompassing the App Store, iCloud, Apple Pay, and Apple TV.

Apple’s Market Performance and Production Shifts

Apple ranks as the world’s third most valuable company, boasting a market capitalization of $3.6 trillion. Over the past year, Apple’s stock has risen by 8%, lagging behind the S&P 500 Index’s 14% gain and underperforming most of its peers in the “Magnificent 7” group of leading tech stocks.

Some of Apple’s relative weakness is attributed to concerns over tariffs, as the majority of its products are assembled in China. In response, Apple is working to diversify its manufacturing footprint. For instance, in August 2025, the company announced plans to produce all iPhone and Apple Watch cover glass in Kentucky through a partnership with Corning.

Currently, Apple’s forward price-to-earnings (P/E) ratio stands at 30.1, closely aligning with its five-year average.

Apple’s Latest Earnings Results

In its fiscal fourth quarter of 2025, ending September 27, Apple reported revenue of $102.46 billion—a 7.9% increase year-over-year. Net income soared to $27.46 billion, up from $14.73 billion the previous year, resulting in earnings per share (EPS) of $1.85, surpassing analyst forecasts of $1.73.

For the entire year, Apple achieved $416.16 billion in revenue and $112.01 billion in net income, translating to $7.49 EPS compared to $6.11 in 2024.

A key driver of Apple’s profitability is its rapidly expanding Services segment, which is more lucrative than hardware due to lower costs in design and manufacturing. In the past year, Apple’s products generated $307 billion in revenue with a 36.7% margin, while Services brought in $109.16 billion at a 75.4% margin.

Apple is set to announce its first-quarter 2026 results after markets close on January 29.

Analyst Forecasts for Apple Stock

With the next earnings report approaching, analysts expect Apple to post EPS of $2.65, representing a 10.4% increase from the prior year. Among 42 analysts covering Apple, the consensus is a “Moderate Buy,” with only two recommending a sell. Sixteen suggest holding the stock, while 24 advocate buying.

The average price target of $289 implies a potential 17% upside, while the most optimistic forecast of $350 points to a possible 42% gain. Conversely, one analyst’s target of $230 indicates a potential decline.

Apple’s improved performance in China signals the likelihood of a strong earnings report. Investors should monitor the company’s sales figures when released on January 29 and watch for updates on Apple’s advancements in artificial intelligence and the rollout of Apple Intelligence across its product range.

Overall, Apple appears poised for a solid year, even as it receives less attention than some of its fellow “Magnificent 7” tech giants.