This iPhone Upgrade Cycle Could Set the Stage for Apple’s Supercycle

The AI-driven release of the iPhone 16 in September may initiate a significant growth period for Apple, according to analysts from Wedbush in a recent report.

The investment firm now expects that initial shipments of the iPhone 16 could exceed 90 million units, surpassing earlier predictions of 80 million to 84 million units, reflecting a double-digit year-over-year increase.

Wedbush’s analysts stated, “We are seeing more indications across the Asia supply chain that this iPhone upgrade cycle could be historic, setting the stage for a supercycle. We estimate that approximately 300 million iPhones globally have not been upgraded in over four years.”

They further expressed optimism, suggesting that Apple could sell more than 240 million iPhones in fiscal year 2025 as this AI-driven upgrade trend takes off.

China remains a pivotal region for Apple’s growth, with expectations that the iPhone 16 will generate renewed momentum in this critical market as the company approaches FY25.

Since the WWDC event in early June, there has been increasing optimism within the Asia supply chain, with many speculating that the iPhone 16 could usher in a “golden upgrade cycle” for Apple, driven by pent-up global demand.

The analysts noted that the market is starting to realize Apple’s potential role in the consumer AI revolution, referring to the company as possible “gatekeepers.” They anticipate that developers will create hundreds of generative AI-driven applications within the next six to twelve months, which will be crucial for Apple’s success as its technology infrastructure lays the groundwork for the anticipated consumer AI wave, beginning with the iPhone 16.

In terms of financial impact, the analysts project that this AI-driven growth could yield an additional $10 billion in high-margin services revenue annually for Apple. They view this as the start of a new, diverse revenue stream encompassing both hardware and software.

The note concludes with the view that the introduction of AI technology into the Apple ecosystem will create monetization opportunities across services and hardware, potentially adding $30 to $40 per share.

Wedbush has maintained an Outperform rating on Apple stock, setting a price target of $285.