The upcoming generation of Apple’s (AAPL) AI-enabled iPhones will kick off a multi-year upgrade cycle, Bank of America analysts said in a note on Wednesday.
These phones, which BofA refers to as “IntelliPhones,” mark a pivotal moment for Apple (NASDAQ:AAPL) and the broader industry, similar to the one when smartphones were first introduced. Notably, analysts believe the adoption curve of AI phones could surpass the pace of both smartphones and 5G technology.
“With an installed base of over 4bn smartphones, we see the opportunity for the next upgrade cycle to be once in a decade type of event,” analysts said in a note.
“While we do not expect all these features at WWDC, we do expect a pathway for the IntelliPhones to become mainstream especially as conversational AI gets more integrated into daily use along with the backend of AI agents,” they added.
As such, the Wall Street giant reiterated a Top Pick rating on AAPL, citing expectations of a “multiyear upgrade cycle, gross margin upside and secular services growth.”
BofA notes that IntelliPhones will set themselves apart through advanced context awareness. Specifically, these devices will leverage machine learning and AI to provide superior personal assistance, language processing, health monitoring, photography, security, battery management, AR/VR experiences, and customizable user experiences.
Moreover, the rise of the so-called “AI agents” will further improve user experience across various industries. BofA believes these agents will revolutionize sectors such as travel, health, fitness, and education, enabling intelligent itinerary planning and expert roles.
By providing tailored services through conversational interfaces, AI agents will mimic past human interactions, such as travel agents and tutors.