iPhone + AI will launch an Apple upgrade cycle

The analysts are getting excited for what Apple will introduce at WWDC next week, with at least two of them anticipating the news will be a catalyst for the company’s stock. They even think the news will boost Apple’s upgrade sales.

Morgan Stanley analyst Erik Woodring expects what we all do, including a smarter Siri, foundational Generative AI partnerships, and the introduction of Apple’s first GenAI at the edge solutions. All of these will be of interest, but there are two additional take aways:

Some of these tools may not be backwards compatible across all devices. This echoes recent reports that some functions may be limited to the most recent iPhones.
That limited support means many users will upgrade to get the new AI Shiny.
Woodring thinks if Apple were to offer an AI subscription at $5 per month, and 5-10% of the iPhone installed base signed up, it would add up to $8 billion to Services revenue.

“We don’t expect Apple to launch any new AI-related services or subscription offerings at WWDC 2024, however we do believe Apple is evaluating how to monetize AI beyond just hardware sales,” he said in a note to clients.

Samik Chatterjee at JP Morgan is also expecting a lot from Apple’s announcements. He anticipates Apple will convince investors of its ability to differentiate its products with its approach to GenAI. The impact may be “substantial” he said.

A new digital transformation

These statements seem to echo sentiment elsewhere. Trading View points out that some analysts are incredibly bullish on Apple’s stock, with targets heading to $275 per share – though some outrider analysts predict stock as low as $120.

Of course, this isn’t really a story about stock price. What seems to be happening is that Apple is about to explain how it will weave Gen AI and new partnerships in AI across its product portfolio. Once this cloth is spun, Apple will be offering a world class AI equipped platform solution across Mac, iPhone, iPad and everything else.

With privacy front and center to its approach, this should help the company leap into sectors desperate for secure use of AI. And, of course, when it comes to its up and coming new visionOS product range, the introduction of Gen AI could be absolutely epoch defining. It could, and probably will, transform some industries, including health, engineering, training and more.

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