Investment firm Wedbush predicts a "monumental iPhone 16 upgrade cycle" fueled by Apple's (NASDAQ:AAPL) advancements in artificial intelligence (AI).
Analysts' optimism stems from "recent Asia supply chain checks," indicating iPhone stabilization and a potential growth turnaround in China, Apple's key market. Wedbush believes the iPhone 16, launching in mid-September 2024, will be the catalyst for this surge.
"We believe after a better than expected March quarter, spots of optimism for iPhone growth are forming in various markets," Wedbush states. This optimism is fueled by the upcoming iPhone 16 AI driven upgrade, which Wedbush views as a "golden upgrade cycle for Cupertino" due to pent-up demand.
Wedbush emphasizes the significance of Apple's AI push, claiming "Apple Intelligence on the doorstep" positions Apple as the "gatekeepers of the consumer AI Revolution." They believe developers will need to integrate their AI models with Apple Intelligence to reach Apple's vast user base of over 2.2 billion iOS devices.
This AI integration presents a significant financial opportunity for Apple. Wedbush predicts developers will build "hundreds of generative AI-driven apps" that will leverage Apple's technology stack, leading to "incremental Services high margin growth annually of $10 billion." They estimate the introduction of AI will add "$30 to $40 per share" to Apple's value.
Wedbush concludes by reiterating their bullish stance on Apple, citing five key factors: achievable 2024 iPhone sales targets, pent-up demand for the AI-powered iPhone 16, continued growth in high-margin services, the arrival of Apple Intelligence, and Apple's unmatched installed base.