Artificial intelligence capabilities will drive a major upgrade cycle for Apple's iPhone business, two Wall Street analysts said Wednesday. Apple stock spiked to a record high on the news.
"AI functionality is likely to drive a multiyear upgrade cycle" for iPhones, BofA Securities analyst Wamsi Mohan said in a client note. He added that Wall Street's current consensus estimates for iPhone sales are too low for the next two years.
Wedbush Securities analyst Daniel Ives concurred. He said Apple's AI push "will catalyze a long-awaited super cycle" for iPhone sales.
Ives estimates that 270 million iPhones out of the 1.5 billion worldwide installed base have not been upgraded in more than four years.
On the stock market today, Apple stock rose 2.9% to close at 213.07. Earlier in the session, it notched an all-time high of 220.20.
Apple Stock Tops Microsoft In Market Value
With the move higher, Apple overtook Microsoft as the world's most valuable company for much of the day. But Microsoft ended the regular session higher than Apple. Apple now has a market capitalization of $3.27 trillion vs. $3.28 trillion for Microsoft.
Apple shares have been on a tear since the company outlined its AI strategy, called Apple Intelligence, at its Worldwide Developers Conference on Monday. During a keynote presentation, Apple executives emphasized on-device AI capabilities for its products, including the iPhone.
"With the advent of Apple Intelligence, we see replacement cycles shrinking, creating a stronger replacement dynamic," BofA's Mohan said. "Typically, compelling features also drive increased migration from Android to the Apple ecosystem."
Current consensus estimates call for iPhone unit sales of 241 million in 2025 and 238 million in 2026. But Mohan's "arguably conservative estimates" predict 247 million iPhone unit sales in 2025 and 257 million units in 2026.
BofA's Mohan reiterated his buy rating on Apple stock with a price target of 230.
Wedbush's Ives maintained his outperform rating on Apple stock with a price target of 275.
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