Apple (AAPL) is expected to ship more iPhone 16 units than Wall Street originally estimated, with potentially more customers looking to upgrade due to the company’s artificial intelligence features, according to Wedbush Securities.
The brokerage anticipates initial shipments of the upcoming model of the technology giant’s flagship product to be closer to over 90 million units, compared with the market’s forecast of 80 million to 84 million units, it said in a Sunday client note. Wedbush estimates that roughly 300 million iPhones worldwide have not been upgraded in over four years.
“With anticipation from the Street and broader tech industry building for Apple’s iPhone 16 AI driven launch in September, our recent Asia checks this week are giving us more confidence this upgrade cycle will kick off a long awaited renaissance of growth for Cupertino over the next year,” analysts led by Daniel Ives wrote in the note.
Wedbush maintained its outperform rating on Apple’s stock and reiterated the 12-month price target of $285.
China remains the “linchpin of growth” for the company and is set to see “improving” gains starting with the iPhone 16 heading into fiscal 2025, according to Ives. Apple could sell over 240 million iPhone units in the next fiscal year as the AI-driven upgrade cycle takes hold, Wedbush said.
The brokerage expects developers to build “hundreds” of generative AI-driven applications over the next 6 to 12 months. Other big tech companies such as Meta Platforms (META) and Alphabet’s (GOOG, GOOGL) Google will now likely need to integrate their models and technology into Apple’s AI platform, Wedbush said.
“We estimate this could result in incremental services high margin growth annually of $10 billion for Apple,” Ives said. “We believe AI technology being introduced into the Apple ecosystem will bring monetization opportunities on both the services as well as iPhone/hardware front and adds $30 to $40 per share.”
Apple reported better-than-expected fiscal third-quarter results earlier this month, driven by gains in iPad and Mac sales. Revenue for iPhone declined on a yearly basis, but the active installed base “grew to a new all-time high in total and in every geographic segment,” Chief Financial Officer Luca Maestri said during a conference call at the time.