The investment bank said for quarter ended March, it is trimming its iPhone sales expectations by 1.7 million units. It now expects sales of 53 million units in the calendar first quarter. For the three months to June, Goldman said it expects sales of 40.3 million units, a reduction of 3.2 million from its previous forecast.

"iPhone demand expectations for March and June are already weak but we believe that early CQ1 (calendar first quarter) demand indications suggest even lower actual numbers than consensus is modeling," Goldman Sachs said in a note late Tuesday.

The Wall Street analysts said that it has reduced its iPhone shipment forecast by 2.5 percent to 217.3 million units for Apple's fiscal year which ends on September 30, 2018. It also cut its iPhone shipment expectations for fiscal 2019 and 2020 by 4 percent and 1.8 percent respectively.

Goldman Sachs said that its expectations of the average selling price (ASP) of Apple products is now 2 percent below market consensus for the June quarter.

As a result of its reduction in iPhone shipments, Goldman also reduced its revenue forecasts for this fiscal year ending September by 2.4 percent to $256.6 billion. For the 2019 fiscal year, Goldman cut its revenue forecast by 2.7 percent to $272.5 billion.

The investment bank also revised downwards the rate at which it expects people to replace their devices, even in China. Despite declining replacement rates, Goldman said the number of people with iPhones will continue to grow and currently stands at 631 million units.

Apple released the $999 iPhone X last year, with Wall Street's expectations of sales high. But a number of reports have suggested that demand has not been strong. The Nikkei reported at the end of January that Apple was making a big cut to iPhone X production. In a note in February, Goldman said that Apple's shares were unlikely to outperform the market. Earlier this month, Rosenblatt Securities' Jun Zhang, cut his expectations for iPhone X sales for the first half of the year by 5.5 million units.

Noted Apple analyst Ming-Chi Kuo from KGI securities said Apple is likely to release 3 new iPhones in 2018. One with a 6.5-inch OLED screen, another with a 5.8-inch OLED display and one more with a 6.1-inch traditional LCD screen. OLED is the screen technology Apple used for the first time on the iPhone X.

With the new upcoming phones, Goldman said that ASPs will recover in fiscal 2019 and 2020.

"We believe that consensus forecasts continue to miss the impact of a potential mix shift toward higher priced X phones even though our own ASP expectations are tempered somewhat by the addition of the relatively lower priced (compared to OLED models) LCD X phone," Goldman said.

The Wall Street firm also said it expects the upcoming OLED phone will start at $949 compared with the $999 starting-price tag of the iPhone X.

Source: cnbc