Gene Munster’s bull case for Apple iPhone: 15% growth in FY25 and 17% in FY26

Longtime Apple analyst Gene Munster believes iPhone revenue will grow at 15% in FY25, compared to the Street’s estimate of 7%. For FY26, Munster expects 17% growth versus the Street’s 8%. The most significant factor in Munster’s estimate is his belief that 8% of the iPhone installed base will upgrade early in FY25, and 14% in FY26.

Gene Munster for Deepwater Asset Management:
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I believe the average life of an iPhone is about 5 years. I’ve seen estimates all over the board that range between 3 and 7 years. In other words, there’s little consensus on this important topic. My estimate of 5 years takes into account that Apple retains 90% of iPhone users, ASPs, and historical iPhone growth rates.

Key Assumptions:

1. 5-year average lifespan of an iPhone.
2. In FY24, the ASP hit $817.
3. 90% of iPhone owners eventually buy another iPhone.
4. Annual cohorts are impacted by iPhone growth from 5 years ago.

Building on top of the iPhone pool is an exercise in terms of how many iPhone users will be compelled to upgrade early. I believe it’s realistic that in FY25, 3% of the FY26 upgrade cohort will move into FY25, 2% of the FY27 cohort upgrades in FY25, 2% of the FY28 cohort upgrades in FY25, and 1% of the FY29 cohort upgrades in FY25. This means that 8% of the base jumps forward into FY25.

Factoring in the cohort upgrade estimates into the iPhone upgrade pool yields 15% iPhone growth in FY25, and 17% in FY26.

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MacDailyNews Take: Strong, but then what happens to iPhone demand in FY27 and FY28? Currently, without knowing what, if any, tricks Apple has up its sleeve, Munster foresees iPhone declining 5% in each of those years.

However, if Apple were to create an edge-pushing “iPhone Ultra,” a foldable iPhone, a drop-hardened, double-battery-life iPhone, and/or other unique, compelling models, we’d expect iPhone sales to do better than that in FY27 and FY28.

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