Apple's iPhone 16 sales are likely to be "stronger for longer" because of the gradual rollout of AI functions, a Wall Street analyst says. Apple stock rose on Tuesday.
"The iPhone 16 cycle will likely have a longer tail than most iPhone upgrade cycles for two reasons," Evercore ISI analyst Amit Daryanani said in a client note.
First, "AI features will have a staggered rollout and will likely not be fully available until calendar 2025," he said.
Second, positive word of mouth about AI features will spread steadily and convince owners of older iPhones to upgrade "as time goes on," Daryanani said.
"The initial rollout of AI will only function in American English and features will likely be limited to alert recaps, content summaries (webpages, notes, transcripts, etc.), image generation, and a few other features," Daryanani said.
He added, "The more compelling upgrades like semantic indexing (personal context), enabling Siri to have greater control over apps and other phone features, and on screen awareness may not be available until calendar 2025."
Apple Stock Gets Price-Target Hike
Daryanani reiterated his outperform rating on Apple stock and raised his price target to 250 from 220.
On the stock market today, Apple stock rose 0.5% to close at 209.07.
Apple is likely to introduce its iPhone 16 series smartphones in September.
Daryanani increased his estimate for fiscal 2025 iPhone revenue to $213 billion from $207 billion. His new estimate calls for 7% growth year over year vs. the consensus estimate of 3%.
He also increased his estimates for total revenue and earnings per share. He now expects Apple to earn $7.55 a share on sales of $418 billion in fiscal 2025, both above consensus estimates.
On June 11, Apple stock broke out of a cup base at a buy point of 199.62, according to IBD MarketSurge charts. It hit a record high of 220.20 on June 12 before retreating.
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