SAN FRANCISCO (Reuters) - Wall Street has regained an appetite for Apple as investors bet that the release of a 10th-anniversary iPhone and pent up customer demand will shore up shrinking sales.

FILE PHOTO - The new iPhone 7 smartphone goes on sale inside an Apple Inc. store in Los Angeles, California, U.S., September 16, 2016. REUTERS/Lucy Nicholson/File Photo

The largest component of the S&P 500, Apple remained a core holding of Wall Street throughout a decline in the stock in the first half of last year. But a recent rebound and speculation about an expected new phone have kindled additional investor interest.

Apple’s 15-percent rally since mid-November pushed the stock to levels not seen in more than a year and boosted over 100 mutual funds that became shareholders in recent quarters.

The gains have come even as Apple struggles with slow global demand for smartphones, made worse by consumers in key growth regions like China and India preferring Android devices selling for under $200.

The stock is up 36 percent from lows in May of last year, when it was plagued by worries about iPhone sales, which fell in 2016 for the first time. The shares are now down 8 percent from a record high close in February 2015.

Many on Wall Street expect Apple, which reports its fiscal first-quarter results on Tuesday, to mark the 10th anniversary of the iPhone this year with a dramatically improved model.

Apple has not disclosed details, but analysts have speculated about potential new features including better haptic technology, wireless charging and a curved display that many believe will attract consumers who have begun to lose interest in smartphones.

“We think this is going to be a pretty solid launch, a really big one,” said Brian Hennessey, portfolio manager of the Alpine Dynamic Dividend Fund, whose largest holding is Apple. “I think even the bears would probably suggest that this product that’s coming out is going to be pretty interesting and hard to ignore.”

The number of mutual funds reporting they became Apple shareholders in recent quarterly filings has jumped by 188 percent to 288, while the number of mutual funds liquidating their Apple holdings dropped by 25 percent to 154, according to Morningstar.

Strong sales of the iPhone 6S two years ago have arguably left a larger-than-normal base of customers now ready to upgrade to new devices in what several analysts have describe as a “supercycle.”

Citing recent supply and demand checks, Morgan Stanley analyst Katy Huberty on Jan. 16 cut her estimate for December-quarter iPhone shipments to 75 million units from 79 million, and she warned that Apple would likely give March-quarter guidance below investors’ expectations. But confident about pent up demand, Huberty raised her iPhone estimates for the fiscal year starting in October and said Apple remains a top pick.

Apple’s recent stock gain makes the success of its next iPhone all the more crucial, said Trip Miller, managing partner of hedge fund Gullane Capital. Attracted to the healthy balance sheet and a price/earnings multiple that is low versus the S&P 500’s average, the fund added to an existing Apple stake after the stock swooned last year. Apple currently makes up about 5 percent of its portfolio, Miller said.

Apple is rushing to expand music streaming and other services that provide recurring revenues in a bid to offset lackluster iPhones sales, which still account for 60 percent of total revenue.

“They really need to have a big value-add in the next product they come out with,” Miller said.

Also sounding a cautious note, Barclays analyst Mark Moskowitz downgraded Apple on Jan. 24 to “equal weight” from “overweight”, warning that this year’s new iPhones may not entice consumers increasingly content to keep their devices for three or four years, instead of two or three.

Apple’s recent rally has left its stock trading at 12.9 times expected earnings, pricier than its five-year average of about 12.0 times expected earnings but far cheaper than the S&P 500’s multiple of 17.2 times earnings, according to Thomson Reuters Datastream.

After three consecutive quarters of declines, Apple in the December-quarter is expected by analysts to report a 2-percent increase in revenue to $77.4 billion, according to Thomson Reuters data. Revenue for fiscal 2017 is expected by analysts to grow 5.5 percent, recovering some of last year’s 7.7 percent decline.

(This version of the story was refiled to fix spelling of “supercycle,” paragraph 10)