Wedbush: “Apple supercycle might be triggered by the iPhone upgrade cycle”

Wedbush analysts stated in a Sunday note that Apple may enter a major growth phase over the course of the upcoming year with the AI-driven introduction of the iPhone 16 in September.

The investment company now estimates that the first-quarter shipments of the iPhone 16 might reach over 90 million devices, which would be a double-digit year-over-year rise over the initial Street expectations of 80 million to 84 million units.

"As we estimate that about 300 million iPhones globally have not been upgraded in over 4 years, we are seeing more indications across the Asia supply chain that this iPhone upgrade cycle could be a historical one setting the stage for a supercycle," analysts said.

Analysts stress that China is still a crucial market for Apple's expansion, and as the firm enters its fiscal year 2025, the iPhone 16 is predicted to spark fresh growth in this important area.

Many in the Asia supply chain have been increasingly optimistic since the early June WWDC event. They think that the iPhone 16 might initiate a "golden upgrade cycle" for Apple, driven by the company's pent-up worldwide demand.

According to Wedbush, the market is starting to realise that Apple has the potential to become the "gatekeepers of the consumer AI Revolution" due to Apple Intelligence.

Over the next 6 to 12 months, they believe that developers will produce hundreds of generative AI-driven applications. These apps will be essential to the company's success since its technological stack will serve as the cornerstone of the anticipated consumer AI wave, which is expected to begin with the iPhone 16.

Analysts have calculated the potential effect, estimating that this AI-driven development might bring Apple an extra $10 billion in high-margin services income a year. They view this as the start of a brand-new, multifaceted business stream for artificial intelligence that will cover both software and hardware.

"We believe AI technology being introduced into the Apple ecosystem will bring monetisation opportunities on both the services as well as iPhone/hardware front and adds $30 to $40 per share," Wedbush added.

(Sources: investing.com, reuters.com)