The AI-driven launch of iPhone 16 in September could kick off a significant growth phase for Apple (NASDAQ:AAPL) over the next year, Wedbush analysts said in a Sunday note.
The investment firm now projects that initial iPhone 16 shipments could exceed 90 million units, surpassing the original Street expectations of 80 million to 84 million units, representing a double-digit year-over-year increase.
"We are seeing more indications across the Asia supply chain this iPhone upgrade cycle could be a historical one setting the stage for a supercycle as currently we estimate roughly 300 million iPhones globally have not upgraded in over 4 years,” analysts wrote.
"In our view, Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold," they added.
The analysts emphasize that China remains a critical region for Apple's growth, with the iPhone 16 expected to drive renewed momentum in this key market as the company heads into the fiscal year 2025.
Since the WWDC event in early June, optimism has been rising within the Asia supply chain, with many believing that the iPhone 16 could mark a "golden upgrade cycle" for Apple, fueled by pent-up global demand.
Wedbush observes the market is beginning to recognize that, with Apple Intelligence, Apple could become the “gatekeepers of the consumer AI Revolution.”
They expect developers to create hundreds of generative AI-driven apps over the next six to twelve months, which will be crucial for the company’s success as its technology stack forms the foundation of the anticipated consumer AI wave, starting with the iPhone 16.
Quantifying the potential impact, the analysts estimate that this AI-driven growth could generate an additional $10 billion in high-margin Services revenue annually for Apple. They see this as the beginning of a new, multi-faceted AI revenue stream that will encompass both hardware and software.
"We believe AI technology being introduced into the Apple ecosystem will bring monetization opportunities on both the services as well as iPhone/hardware front and adds $30 to $40 per share," the note states.
Wedbush maintained an Outperform rating on Apple stock and the price target of $285.