Apple Analyst Signals 'Slower Start To The AI Cycle' As iPhone 16 Demand Softens

As the curtain rises on the iPhone 16 Series, Apple enthusiasts are buzzing with anticipation. However, JPMorgan analyst Samik Chatterjee suggests that while the hype is palpable, the initial momentum for high-end models appears muted compared to past launches.

iPhone 16: ‘Launch Lacking Early Momentum’

Chatterjee highlights that the rollout has faced a slight hiccup, primarily due to the unavailability of AI capabilities, which seems to be causing a pause among potential buyers.

In Chatterjee’s latest insights, he points out, "Early signs are indicating a robust product cycle; albeit, with the launch lacking early momentum for the high-end models." This may prompt consumers to hold off on their purchases until they can fully grasp the AI value proposition.

As a result, JPMorgan has adjusted its near-term iPhone unit forecast, now estimating about 126 million iPhones sold in the second half of 2024, down from 130 million previously.

Read Also: Apple’s iPhone 16 Series Leads Growth, But High-End Model Preference Declines: Analyst

Medium-Term Prospects Are Bullish, Says Apple Analyst

Despite these short-term adjustments, Chatterjee maintains a bullish outlook on the medium-term prospects for Apple. He asserts, "We continue to forecast aggregate volumes for the 16 Series over the next four quarters to track ahead of both the 15 and 14 Series," indicating a confidence that consumer appetite for AI-integrated features will ramp up once they become widely available.

Long-Term Upside Is Evident

The analyst's enthusiasm for the long-term potential is underpinned by expectations of a robust AI upgrade cycle. "We see upside in several aspects of the business… transformation of the company to Services, growth in the installed base, technology leadership, and optionality around capital deployment," he said

With this optimism, JPMorgan reiterates its price target for Apple at $265 by December 2025.

Investors might feel a pinch in the near term, as the excitement around AI upgrades may not translate into immediate sales.

But, as Chatterjee aptly puts it, "The slower start to the AI cycle than originally anticipated" is just a temporary roadblock to growth. The real treasure, he believes, lies just beyond the horizon as Apple continues to evolve and innovate.

While the iPhone 16 Series may not be breaking records just yet, the groundwork for a significant AI upgrade cycle is being laid, promising a future where Apple once again dazzles its fans and investors alike.

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