Apple’s iPhone 16 sales are expected to experience prolonged strength due to the phased introduction of artificial intelligence (AI) functions, according to a Wall Street analyst. On Tuesday, Apple stock saw an increase.
AI Features to Drive Long-Term Sales
In a client note, Evercore ISI analyst Amit Daryanani outlined two primary reasons for the anticipated extended sales cycle of the iPhone 16. “The iPhone 16 cycle will likely have a longer tail than most iPhone upgrade cycles for two reasons,” he stated.
Firstly, Daryanani highlighted that AI features will be introduced gradually and might not be fully available until 2025. “AI features will have a staggered rollout and will likely not be fully available until calendar 2025,” he noted.
Secondly, the analyst emphasized the impact of positive word of mouth. As AI features become more widely known, owners of older iPhone models are expected to upgrade over time. “Positive word of mouth about AI features will spread steadily and convince owners of older iPhones to upgrade as time goes on,” Daryanani said.
Initial AI Features and Future Enhancements
The initial AI rollout will include functionalities such as alert recaps, content summaries of webpages, notes, and transcripts, as well as image generation. However, these features will initially be available only in American English, Daryanani mentioned.
“The initial rollout of AI will only function in American English and features will likely be limited to alert recaps, content summaries (webpages, notes, transcripts, etc.), image generation, and a few other features,” he explained.
More advanced AI features are expected to follow. These include semantic indexing for personal context, enabling Siri to have greater control over apps and other phone features, and on-screen awareness. These enhancements may not be available until 2025, Daryanani added. “The more compelling upgrades like semantic indexing (personal context), enabling Siri to have greater control over apps and other phone features, and on-screen awareness may not be available until calendar 2025.”
Apple Stock and Financial Forecasts
Reiterating his outperform rating on Apple stock, Daryanani raised his price target from $220 to $250. On the stock market today, Apple shares rose by 0.5%, closing at $209.07.
Apple is expected to unveil its iPhone 16 series in September. Anticipating strong sales, Daryanani increased his revenue estimate for fiscal 2025 iPhone sales from $207 billion to $213 billion, forecasting a 7% year-over-year growth compared to the consensus estimate of 3%.
The analyst also revised his overall revenue and earnings per share estimates for Apple. He now projects that Apple will earn $7.55 per share on sales of $418 billion in fiscal 2025, both figures exceeding consensus estimates.
Stock Performance and Market Reaction
Apple stock recently demonstrated strong performance, breaking out of a cup base at a buy point of $199.62 on June 11, according to IBD MarketSurge charts. The stock reached a record high of $220.20 on June 12 before pulling back.
Conclusion
With a strategic, phased rollout of AI features and positive market reception, Apple’s iPhone 16 is poised to achieve sustained sales growth. Analysts remain optimistic, reflected in the increased price targets and revenue forecasts, indicating strong market confidence in Apple’s innovative advancements.
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