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Apple is pinning its hopes on recent artificial intelligence-based software to spice up flagging iPhone sales, with Wall Street betting that generative AI features will persuade thousands and thousands of consumers to purchase the most recent version of the best-selling device.
The tech giant will unveil the iPhone 16 on Monday at its headquarters in Cupertino, California. Market expectations for sales of recent iPhones call for revenue growth of about 5 percent in 2025, because of an expected upgrade cycle driven by consumers lured by recent AI features.
The device is the most recent vehicle for the “Apple Intelligence” system that CEO Tim Cook introduced in June. This features a redesigned Siri voice assistant, image editing functions based on Apple's own AI models, and a partnership with OpenAI that offers users free access to ChatGPT.
The Financial Times reported on Saturday that the device features a recent A18 chip designed with Arm's latest technology to raised handle the demanding computing workloads of AI models.
However, analysts said they’d have liked more clarity on how quickly the corporate could introduce and improve Apple Intelligence, as it might create a brand new, unpredictable think about the corporate's business.
For the primary time for the reason that launch of the primary iPhone over 17 years ago, Apple is counting on AI-powered software upgrades fairly than hardware changes to persuade users to purchase a brand new device yearly – a habit that has helped the corporate develop into a $3.3 trillion company.
“This is a cycle where things are being rolled out regularly, versus a typical launch where there are improvements in hardware,” said Wamsi Mohan, an analyst at Bank of America. “What isn't completely clear yet is when Apple Intelligence can be introduced and with what features. That changes the way in which people have a look at the dynamics of the cycle.”
Any growth in iPhone sales can be a big improvement over this 12 months, when competitive pressure in China proved to be a drag on the tech giant's flagship product. iPhone revenue fell 10 percent year-on-year in the primary three months of 2024, reaching $46 billion.
In the April to June quarter, iPhone sales were still barely below the previous 12 months's figure at $39.3 billion. The iPhone accounted for around 46 percent of Apple's total sales in the identical quarter.
Apple shares have risen by around 19 percent for the reason that starting of the 12 months. In the weeks following the Apple Intelligence announcement, the corporate experienced an upswing and was capable of defend its position because the most useful company listed on the US stock exchange alongside Microsoft and Nvidia.
One unknown, nevertheless, is how quickly Apple Intelligence can be rolled out globally. Apple has said the brand new OpenAI features can be available by the top of the 12 months. The first features will initially only be available in US English, while some features have been temporarily delayed in Europe, with Apple blaming recent EU technology regulations.
Analysts at Piper Sandler and Morgan Stanley said their principal give attention to Monday can be what the corporate broadcasts about its AI roadmap. Wedbush analyst Dan Ives was optimistic, saying in a note Friday that Apple is about to embark on “the most important upgrade cycle in its history.”
“It's different from the same old cycle (of an iPhone launch) where there's this cash-box mentality where you’ll be able to estimate how well it's going to do based on data points from the primary month or two,” said Gene Munster of Deepwater Asset Management. “Basically, it's going to take a while to construct momentum.”
Munster also warned that the success of iPhone launches can fluctuate. In fiscal 2019, before the coronavirus pandemic, iPhone sales fell by about 13.6 percent. A Covid-era boom then brought growth of 39.3 percent in fiscal 2021, but this stagnated in 2022 and 2023.
“It's really removed from a 'Steady Eddie' business, irrespective of how much some investors would love to consider that,” Munster said.
