The impact of the introduction of Apple Intelligence on the sales of the iPhone 16, 16 Plus, 16 Pro, and 16 Pro Max is uncertain. Initially, many stock market observers believed that Apple was finally jumping on the AI bandwagon, which had been a trend at Wall Street for several years. This belief contributed to a significant increase in Apple’s stock price last year. However, whether this will lead to a new “Super Cycle,” where users of older iPhones are encouraged to upgrade en masse, remains unclear.
Ming-Chi Kuo, a well-known analyst from the Taiwanese investment firm TF International Securities, warns against overestimating the effects of Apple Intelligence. In a report to investors this week, he mentioned “potential downside risks,” indicating the risks of overvaluing Apple’s stock. His industry contacts informed him that Apple would face some “challenging hurdles” in 2025. He also suggested that iPhone growth could “nearly stagnate.” Overall, Kuo sees no evidence that Apple Intelligence is driving hardware upgrades, nor does he see it boosting the services business.
Apple has emphasized that Apple Intelligence will not become a paid offering, unlike products from companies like OpenAI and Anthropic. Tim Cook, the company’s CEO, considers AI a core technology that is part of the overall system. This suggests that earlier optimistic forecasts by some analysts and media about Apple Intelligence generating subscription revenue and boosting the services business in the near future were too optimistic, according to Kuo.
Kuo also mentioned surveys indicating that “most” iPhone users have little interest in Apple Intelligence. Apple is struggling to promote its “On-Device AI” model, which focuses on privacy, while competitors like ChatGPT and Claude rely on the cloud, potentially making them more powerful.
Nonetheless, Kuo states that he is not a “bear” on Apple Intelligence in the long term. However, it is important to be aware of short-term risks. Currently, Apple’s iPhone sales are doing well. The company reportedly sold more expensive devices in the third quarter with the iPhone 15 and 16 than ever before. The number of devices shipped also reached a peak according to market observers.