Apple‘s new iPhone will be released today, particularly its integration of artificial intelligence (AI), alias Apple Intelligence. While Apple, with its massive market cap exceeding \$3 trillion, relies heavily on iPhone sales, the smartphone market has matured, leading to slower growth. This makes the upcoming AI iPhones crucial for Apple’s future. Apple’s stock price has surged approximately 25% in the past six months, surpassing its tech counterparts. This surge suggests high expectations for the new iPhones and their AI capabilities, pushing the stock’s valuation to nearly 31 times forward earnings.
However, this optimism carries inherent risks. Historically, Apple’s stock dips slightly on iPhone announcement days. Additionally, the tangible benefits of on-device AI for boosting iPhone sales remain uncertain. Previous iPhone sales surges often correlated with hardware upgrades like larger screens or the introduction of 5G. While Apple showcased its Apple Intelligence offering at the Worldwide Developer Conference in June, its impact on consumers remains to be seen.
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Adding to the complexity, Apple Intelligence’s full launch is slated for October, meaning the initial batch of new iPhones won’t ship with the software. Certain AI features, like ChatGPT’s integration with Siri, are expected even later in the year. This staggered release creates a two-part sales cycle. Analysts predict a 4.5% rise in iPhone unit sales for Apple’s 2025 fiscal year, driven by the new phones, followed by a 5.4% increase the subsequent year. This suggests a “wait-and-see” approach from the market, with stronger sales anticipated once Apple Intelligence is fully deployed.
Although three years of sluggish iPhone sales indicate a large pool of users due for upgrades, the recent stock surge reveals investor faith in Apple’s AI endeavors. Unlike its tech peers, Apple’s hardware-centric model hasn’t necessitated massive spending on data center-based AI infrastructure like Nvidia’s chips. Whether Apple can monetize AI without significant upfront investment is a question that only time can answer. The success of these AI iPhones will significantly impact Apple’s trajectory in the increasingly competitive tech landscape.
The upcoming iPhone launch is crucial for Apple, with its AI features carrying significant weight. While the market anticipates these advancements, the lack of immediate software integration and uncertain consumer impact create a challenging landscape. Apple’s success hinges on convincing consumers that AI iPhones are not just iterative upgrades but a significant leap forward. The tech giant’s ability to monetize AI without substantial infrastructure investment will be a key factor in determining its future profitability.