The new Apple Inc (NASDAQ:AAPL, ETR:APC) AI strategy announced at yesterday's WWDC24 event "will not lead to a significant iPhone upgrade cycle this fall", UBS analysts have predicted.
The new 'Apple Intelligence' strategy, built around a partnership with OpenAI, includes integration of ChatGPT across iOS 18, iPadOS 18 and macOS Sequoia.
Key features include enhanced Siri commands, text summarization, AI-generated images and emojis, and improved photo search. Apple emphasized the privacy and security of its AI features, with many capabilities running on-device.
UBS analysts said: "The announcement of Apple Intelligence was a bit disappointing relative to expectations in our view. Contrary to consensus, we maintain the view that Apple's AI strategy will not lead to a significant iPhone upgrade cycle this fall.
"Further, our checks on iPhone build rates and manufacturing purchase obligations did not indicate material upside demand thus far," they said, with a recent survey of Apple users finding that interest in gen AI is somewhat muted."
UBS maintained a $190 share price target for Apple, based on a p/e multiple of 27 times for forecast 2025 and 2026 earnings per share of $7.15, reflecting a challenging growth backdrop and higher rates.
Apple also announced the international launch of its Vision Pro device, with availability in multiple countries starting in late June and early July. Additionally, updates to operating systems, including iOS 18, macOS Sequoia, and others, were revealed at the event.