Eight months ago, Samsung ushered in the artificial intelligence revolution in smartphones, launching the Galaxy S24 with included AI features built right into the handset. But according to Wedbush analyst Daniel Ives, that was just a teaser of what’s to come.
The main event arrived on Monday, September 9, when Apple (NASDAQ:AAPL) introduced the iPhone 16. Ives predicts this release will set new records for iPhone sales “as Apple Intelligence will be the launching pad for the consumer AI Revolution globally.”
Ives emphasizes the impact that launching “Apple Intelligence” with the iPhone 16 will have on Apple, predicting that it will drive 12 to 18 months of high-single-digit sales growth. This surge is expected to push the stock as high as $300, potentially delivering a $4 trillion market cap by the end of 2025.
In order to give Apple Intelligence the greatest chance to catch on, and encourage as many owners of older-model iPhones as possible to upgrade, Ives notes that Apple is keeping prices on iPhone 16 unchanged from iPhone 15 levels. iPhone 16 Pros will therefore retail for $999, and iPhone 16 Pro Maxes will cost $1,199. Equipped with A18 processors, Ives says the new phones will be 30% to 40% faster than the iPhone 15, and even faster than older models, further encouraging customers to upgrade.
Will Apple succeed?
Ives thinks it will. Surveying the landscape of iPhone parts suppliers across Asia, the analyst sees “indications … that this iPhone upgrade cycle could be a historical one,” and set the stage for a “supercycle” of iPhone sales as Apple Intelligence becomes a killer app on the phone. He forecasts an initial production run of 90 million iPhone 16 units, growing into a “tidal wave” of sales, with as many as 240 million iPhone 16s selling in fiscal 2025. He further notes that, because iPhone 15 Pros will also be able to carry Apple Intelligence, these will be hot sellers as well, and aided by “significant promotional activity from the carriers around the iPhone 15 starting in September.” And he predicts the supercycle could well continue into the release of the iPhone 17 a year from now, with the addition of new “major hardware/form factor changes” to entice any stragglers to buy into the Apple Intelligence phenomenon.
Ives even muses that the arrival of Apple Intelligence could reverse the company’s slipping sales in China. “Partnerships on the China front for LLM around Baidu over the coming months … will fill in a missing piece of the AI puzzle in the key China market,” predicts the analyst. He believes this sales turnaround could begin as early as next quarter, and will then accelerate over the next 12 months.
With all these factors in mind, Ives rates Apple stock as Outperform (i.e., Buy) and has raised his price target from $285 to $300 – the highest on Wall Street at present. (To watch Ives’ track record, click here)
Most analysts share Ives’ optimism, with 25 of 35 recent reviews rating Apple a Buy. Along with 9 Holds and a single Sell, AAPL boasts a Moderate Buy consensus rating. Currently trading at $220.11, the stock has an average price target of $249.82, suggesting a 13.5% upside over the next 12 months. (See AAPL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
