Analysts predict record-breaking sales as Apple integrates AI features
Apple Inc (NASDAQ:AAPL, ETR:APC) is reportedly off to a strong start with its iPhone 16 units, which officially went on sale this past weekend.
According to a research note from investment bank Wedbush, initial demand checks indicate that this key upgrade cycle is showing robust global interest, setting the stage for significant growth in unit sales starting in the December quarter.
Wedbush analysts project that iPhone 16 unit sales could increase by high single digits and potentially reach double-digit growth compared to previous models.
$4 trillion company
"This is the beginning of an AI-driven iPhone supercycle that should enable Apple to break its historical mark for iPhone units in a year and translate into a $4 trillion market cap for Cupertino in 2025," the Wedbush note said.
The firm maintains its "outperform" rating on Apple stock and has set a price target of $300.
The analysts estimate that over 300 million out of 1.5 billion iPhone users have not upgraded their devices in four years, creating a "golden opportunity" for Apple. Supply chain checks in Asia suggest that the iPhone 16 upgrade cycle will see over 90 million units at initial launch, up by approximately 8 to 10 million units from the iPhone 15.
Wedbush believes this surge is the beginning of an AI-driven supercycle that could enable Apple to break its historical records for iPhone units sold in a year. The integration of "Apple Intelligence" features is expected to play a crucial role in this growth. "In our view, Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold with a robust December quarter on tap," the analysts predict.
China's market dynamics
China remains a focal point for Apple's growth strategy. Wedbush anticipates more partnerships in China for large language models (LLMs), particularly around Baidu, which will enhance AI capabilities in this key market. The note mentions that "OpenAI, in its marquee partnership, will launch the most sophisticated personal assistant for consumers with ChatGPT fueled by Apple's new A18 chip."
Despite competition from Huawei's new trifold smartphone, Apple is concentrating on iPhone 16 upgrades within its massive installed base in China. Wedbush estimates that sales in the region could reach approximately 50 million units in FY25, showing steady double-digit growth after facing negative headwinds over the past year.
Role of Apple Intelligence
Wedbush underscores the significance of "Apple Intelligence" as a catalyst for future growth. The firm believes that over 20% of the world's consumer population will ultimately interact with AI through an Apple device in the coming years. "We believe the Street is starting to slowly recognize that with Apple Intelligence on the doorstep, Cupertino will be the gatekeeper of the consumer AI revolution," the note asserts.
Developers are expected to play a significant role by building hundreds of generative AI-driven apps over the next six to nine months. These applications will be key components in Apple's technology stack, contributing to the anticipated consumer AI tidal wave starting with the iPhone 16.
While some skeptics point to the lack of immediate Apple Intelligence features, Wedbush is confident that Apple's phased rollout strategy will drive strong performance during the holiday season and beyond. The firm also projects that this momentum could translate into a $4 trillion market capitalization for Apple by 2025.