Apple Intelligence and the iPhone 16 will drive ‘good growth’, analyst says

Apple Intelligence and the iPhone 16 will drive ‘good growth’, analyst says

In This Story Apple debuted its latest iPhone, smartwatch, and AirPod models at its annual event Monday. With a new focus on artificial intelligence capabilities , analysts are optimistic about the tech giant’s coming months and years.

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Suggested Reading The Cupertino, California-based tech giant unveiled considerable hardware changes, including larger screens for the iPhone src6 Pro & Pro Max, improved camera quality, powerful chips, and other swanky new tech specs across its new iPhone lineup.

Paired with a new operating system, iOS src8 — the first to support Apple’s new AI initiative: Apple Intelligence — Apple is poised to drive an exciting new upgrade cycle, according to Morningstar equity analyst William Kerwin.

“Ultimately, the thesis is that for consumers to get this Apple Intelligence in their hands, they have to buy the new handset to go with it,” Kerwin said. “We think that’ll drive a good growth year in 2025″

Early AI features, which will only be available on iPhone src5 Pro models or higher, will launch as a software update in beta form in October, with more features to be rolled out in the months to come. Given the high processing power needed to run Apple Intelligence, fewer than src0% of current iPhone users would be able to upgrade their devices to use the new AI features, according to Bloomberg.

This staggered software rollout is unusual for Apple, which would typically send out its latest iPhone models with the newest tech already installed. The iPhone src6 will be available starting Sept. 20. But Kerwin said that doesn’t reflect negatively on Apple or Apple Intelligence.

“It just shows Apple is not going to put a product out until it is perfect in their eyes,” Kerwin said. “It’s more important for them to release a ‘perfect’ product versus a rushed product a month in advance, because once you put out a sub-quality product, that can create reputation issues.”

Apple shares dropped nearly 2% following the event, but ended the day slightly in the green. That dip was not unusual: Apple stock has fallen on src2 of the src7 iPhone launch days, according to data compiled by Bloomberg.

Morningstar has remained bullish on Apple stock, projecting src0% growth in iPhone revenue for the 2025 fiscal year. And Kerwin said Apple Intelligence could help drive a “multi-year growth cycle.”

“There will be consumers, in our view, that might not upgrade in that first year, but then as you get word around, and as Apple adds more features and functionality to Apple Intelligence, you know, it should drive a multi year upgrade cycle,” Kerwin said.

Apple has long been searching for iPhone users to trade in their old models. In recent years, much of the old iPhone buzz has died down, with more people holding onto their smartphones for longer. According to Wedbush estimates, some 300 million iPhones around the world haven’t been upgraded in over four years. To try to find its next big thing, Apple is reportedly spending $30 billion a year on research and development, according to Sherwood.

But analysts are hopeful that Apple’s AI play could help it start to turn that around. Wedbush analysts, led by Dan Ives, said in a report that Apple Intelligence could mark the beginning of the “consumer AI revolution,” with upwards of 240 million iPhones potentially being sold in the 2025 fiscal year as a result of the AI-driven upgrade cycle.

“We expect developers over the next 6 to src2 months will build hundreds of generative AI driven apps that will be key ingredients in the recipe for success for Apple as its technology stack creates the core building blocks of the consumer AI tidal wave we see coming starting with iPhone src6,” Ives said.

Wedbush analysts said last month that Apple’s AI play could raise its market capitalization by more than $4 trillion . Apple currently has a market capitalization of $3.3src trillion.

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