Will AI Be The X-Factor In Apple's Next iPhone?

At the upcoming Worldwide Developers Conference (WWDC) on Monday, Apple Inc. AAPL is expected to showcase various enhancements in its upcoming mobile operating system as well as plans for generative artificial intelligence (AI).

The tech giant, boasting a trillion-dollar-plus market cap, has not yet fully embraced a generative AI strategy until now.

But AI is anticipated to be a major feature in the devices launching this fall, likely under the iPhone 16 label. Analysts predict these phones will incorporate on-device AI capabilities, enabling AI algorithms to be processed directly on the phone's hardware.

Additionally, Siri, Apple’s 12-year-old digital assistant, is expected to receive a substantial AI upgrade. "We expect Apple to introduce its broadest, and most important, AI-enabled software overhaul at WWDC 2024," stated Morgan Stanley analyst Erik Woodring.

The major question is whether an AI-enhanced iPhone will significantly boost sales. Historically, substantial upgrades like larger screens and 5G capabilities have led to strong sales cycles for iPhones.

Analysts have forecast a "multi-year upgrade cycle" driven by these “Intelliphones.” Visible Alpha’s consensus among analysts predicts the new iPhones will drive a 9% increase in unit sales, reaching 242 million units by the end of the fiscal year in September 2025.

Also Read: Apple Could Introduce Passwords App At WWDC 2024 To Challenge 1Password And LastPass

Apple’s iPhone business has generated more than half of the company's revenue over the past twelve fiscal years. But it’s a mature market, meaning consumers are keeping their devices longer due to rising prices.

This fiscal year, iPhone unit sales are expected to decline for the second consecutive year, marking a first in Apple’s history.

Samsung’s experience with its first AI phone, which sold about 13 million units in its first quarter, offers a mixed precedent. While it didn’t offset overall smartphone sales declines, it shows potential interest in AI features among consumers.

Price Action: AAPL shares are trading higher by 0.26% at $194.98 at the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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