Apple's AI-Enabled iPhone 16 Launch Could Open Floodgates For Double-Digit Volume Growth, Says Bullish Analyst: 'Historical One Setting Stage For A Supercycle'

Apple, Inc. AAPL shares have recovered nicely amid anticipation that iPhone demand will perk up following the launch of the next iteration of the flagship device armed with artificial intelligence technology. All pointers are toward a strong uptake of the newest iPhone when it launches, according to Wedbush’s Daniel Ives.

Growth Renaissance: Wedbush’s recent Asia checks last week have increased confidence that the upgrade cycle will set in motion a “long-awaited” renaissance of growth for the company over the next year, said Ives in a note. The analyst now estimates initial iPhone 16 shipments to be closer to 90 million+, marking double-digit growth, compared to original Street estimates of 80 million to 84 million units, he said.

“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,” Ives said, adding that roughly 300 million iPhones globally haven’t been upgraded in over four years.

The analyst forecast iPhone shipments of 240 million units in 2025, thanks to this AI-driven upgrade cycle.

See Also: Everything You Need To Know About Apple Stock

China – Key: China, which has underperformed in recent quarters, is set to see improving growth, starting with iPhone 16 and heading into 2025, Ives said. Citing Asia channel checks, Ives said, that since Apple’s Worldwide Developers’ Conference held in early June, optimism regarding the iPhone 16 AI-driven upgrade representing a golden upgrade cycle has been abounding.

Apple Intelligence Opportunity: The analyst reiterated his view that the Street is slowly recognizing that Apple will be the gatekeeper of the consumer AI revolution with Apple Intelligence. Cupertino announced in June an AI partnership with OpenAI to bring the technology to iOS devices.

Ives noted that there are 2.2 billion iOS devices worldwide and 1.5 billion iPhones. The analyst expects developers to build hundreds of generative AI-driven apps in the next 6 to 12 months. “We estimate this could result in incremental Services high margin growth annually of $10 billion for Apple as this all kicks in,” he said.

Why It’s Important: Apple shares, though having recovered from 2022’s dismal performance, underperformed the rest of the Magnificent Seven peers, barring Tesla, in 2023 amid a lack of topline growth as iPhone demand sagged. A pickup in iPhone volume should bode well for the stock.

Not all are optimistic, though. Bloomberg columnist and Apple leaker Mark Gurman said Sunday in his weekly column that the iPhone 16 may only mark an incremental upgrade from its previous iteration. But he is confident iPhones could return to being a meaningful driver of growth in 2025 with the potential launch of the next iteration of the iPhone SE early in the year, and the late-year unveiling of the iPhone 17 models. He expects something like a slim or an “Air” version of the iPhone of sorts that sits in between the iPhone 17 and iPhone 17 Pro.

Ives has an “outperform” rating and a $285 price target for Apple stock, suggesting roughly a 32% upside from the current level.

Price Action: Apple ended Friday's session up 1.37% at $216.24, according to Benzinga Pro data. The stock has gained 12.6% so far this year.

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