Proactive Investors - Apple Inc (NASDAQ:AAPL, ETR:APC)'s robust iPhone sales in China are just the beginning of an AI-driven super cycle for the tech company, analysts at Wedbush believe.
New data supports their China iPhone rebound thesis, with the latest report from Counterpoint showing that Apple’s iPhone 16 sales rose 20% year-over-year in their first three weeks of sales,
Notably Apple’s iPhone 16 and Huawei’s new model both went on sale on September 20 in this region, the analysts highlighted.
“The strength from Apple in particular is coming from the higher end Pro and Pro Max as models are up an eye popping 44% from a year ago iPhone 15 sales,” they wrote in a note to clients.
Wedbush analysts also see in the coming months Apple and Baidu (NASDAQ:BIDU) partnering for the AI piece of the China market with OpenAI's partnership key for Apple in the US.
There are further indications across the Asia supply chain that this iPhone upgrade cycle “could be a historical, setting the stage for a sypercycle.”
They estimate about 300 million iPhones globally have not been upgraded in more than four years.
“In our view, Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold,” they wrote.
“Apple launching AI coupled by a massive pent up upgrade cycle is creating this new era of iPhone growth including in the key China region which has been a drag on the top-line over the past year. We believe there are 100 million Chinese iPhones in the window of an upgrade opportunity alone for 2025.”
Analysts see Apple positioned to lead the consumer AI revolution with its upcoming Apple Intelligence, which will require developers to integrate their AI technologies into its ecosystem.
As Apple controls a significant installed base of 2.2 billion iOS devices and 1.5 billion iPhones, the company is seen as a key player in shaping the future of AI applications.
Over the next six to 12 months, they anticipate the development of hundreds of generative AI apps that will be essential for Apple's growth, particularly with the rollout of new iOS features in versions 18.1 and 18.2.
“We believe 20% of the world's population will ultimately access AI through an Apple device over the coming years,” they wrote.
Wedbush repeated its ‘Outperform’ rating and $300 price target for Apple, implying upside of almost 30% from its share price on Friday.
“In a nutshell, while the long standing bears have been trying to yell fire in a crowded theater with iPhone mathematical gymnastics, the reality is this iPhone 16 cycle is strong and will be a major growth catalyst for [Apple headquarters] Cupertino over the coming year with a monster holiday season likely on deck as bulls get the popcorn ready,” the analysts concluded.