Apple Intelligence iPhone supercycle will likely begin in the June 2025 quarter – Munster
Apple’s September quarter results reflected stronger than expected iPhone sales and gave guidance for December that suggested top line growth will essentially be unchanged from September. In other words, Apple Intelligence will not accelerate growth in the December quarter, a reality that is disappointing to the “iPhone supercycle” camp. Deepwater Asset Management’s Gene Munster believes that once these features are in place, and available worldwide, the iPhone supercycle will begin, likely in the June 2025 quarter.
Gene Munster for Deepwater Asset Management:
Based on comments from Tim Cook on the earnings call, it suggests the AI offerings will have critical mass somewhere around the end of March next year. I define critical mass as when the offering is compelling enough to motivate people to upgrade their hardware. By the end of March, Apple Intelligence should have full ChatGPT functionality, which will make Siri more useful. Additionally, it should have more advanced writing tools, photo editing capabilities, and a better interface to prioritize and search through all current and incoming data. This will lay the groundwork for developers to embed AI into their apps, which should further unlock consumer value given the potential around agentic AI.
Fast forwarding to end of March 2025, I expect Apple Intelligence will be available to about 75% of all Apple users. The biggest missing piece is China, which I expect by September 2025.
That means the rubber hits the supercycle road starting in the Jun-25 quarter. I continue to believe FY25 will post iPhone growth of 10% y/y, compared to the Street at 5% y/y. This outlook is based on our belief that AI features will motivate 4% of Apple’s FY26 iPhone upgrade cohort to upgrade in FY25.
For FY26, I expect the broader awareness of the utility of Apple Intelligence to be expanding, further driving higher iPhone growth rates. Ultimately, I believe we should see growth rates of 15-20% y/y versus the Street at 7% y/y. This expectation is based on 14% of the FY27 upgrade cohort moving into FY26.
MacDailyNews Take: Wall Street today currently has no idea the mountain of iPhone sales that will be coming next year as the multiyear Apple Intelligence-fueled supercycle takes off.
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