Something very interesting happened over the last few trading sessions. A number of sell-side analysts, even hardcore Apple (AAPL -1.22%) "perma-bulls," have been cutting their iPhone sales estimates for the current fiscal year.

Analysts from many major brokerages have been taking down their iPhone shipment estimates and, in a number of cases, their price targets on Apple stock.

And yet, although well off its 52-week high, Apple stock is still managing to hold above $110 per share, which is still higher than where it traded throughout the majority of 2014 (pre-iPhone 6/6 Plus cycle).

At this point, has Wall Street more or less baked in a weak iPhone 6s/6s Plus cycle?

It would seem so
At this point, it seems widely believed that Apple will see a decline in iPhone unit shipments during the current fiscal year and during calendar year 2016. The estimates of by just how much iPhone sales will decline vary from analyst to analyst, but there are probably very few analysts left who are actually calling for iPhone shipment to grow in the coming year.

Additionally, it's worth pointing out that ahead of this flood of iPhone estimate cuts, at least one sell-side analyst observed that sell-side estimates were generally more optimistic than buy-side estimates, suggesting an iPhone decline this year had been "baked in" by investors ahead of these estimate revisions from the sell-side analysts.

If analyst and investor estimates accurately "bake in" the kind of decline in iPhone that Apple winds up seeing this year, then there's a reasonable chance that the bottom might be in vis-a-vis sentiment around Apple's iPhone business.

Here's a risk, though
At this point, the most significant risk I see is that Wall Street (both sell-siders and buy-siders alike) might still be too optimistic, even in light of the broad expectation that iPhone will shrink.

For example, Katy Huberty with Morgan Stanley thinks iPhone shipments could drop 6% year over year during fiscal 2016. Since Apple shipped about 231 million iPhones in fiscal 2015, this would imply unit shipments of around 217 million in fiscal 2016.

This seems reasonable, and Huberty even says her estimates don't bake in potential upside from the rumored 4-inch iPhone 6c, which could give unit shipments a mid-cycle shot in the arm.

However, if iPhone shipments wind up contracting at an even more rapid pace from the fiscal first quarter peak relative to expectations, then that could catalyze further downside to the stock.

That said, iPhone 7 will probably be the true "tell" over the long term
I suspect investors may be willing to "forgive" lackluster iPhone results this year because the year-over-year comparisons Apple has to contend with relative to the iPhone 6/6 Plus cycle are just too great.

My guess is that we will know whether the iPhone 7 cycle will signal a return to growth for iPhone when the opening weekend numbers for the device are in.

It should have been a clear sign to investors when Apple didn't issue a press release touting "record pre-orders" in the 24-hour period after the iDevice maker began taking preorders for iPhone 6s/6s Plus: Maybe demand for these phones wasn't going to be as hot as demand was for the prior-generation models.

I think we will have a pretty good sign of what iPhone 7 demand will be like during fiscal 2017 once the "opening weekend" numbers are in. If Apple quickly puts out a press release bragging about how great demand is (along with some commentary about records being shattered), then that will be a really good sign. If not, then that would be a worrisome sign for iPhone health over the longer run.