A survey of U.S. consumers in March indicates surprisingly strong demand for iPhone upgrades despite "a challenging fundamental backdrop," Morgan Stanley said Tuesday. Apple stock rose after the report.
Among current iPhone owners surveyed, 51% said they are "extremely likely" to upgrade their device in the next 12 months. That's an all-time high for the AlphaWise survey, analyst Erik Woodring said in a client note. Further, it is 18 percentage points higher than any prior survey in the last decade, he said.
Part of what's driving the pent-up demand for upgrades is the aging installed base of iPhones. Some 60% of survey respondents own an iPhone that is 3+ years old, significantly higher than any prior period over the last decade and on a larger installed base, Woodring said.
"While the tariff backdrop creates myriad uncertainties, our March '25 AlphaWise survey of 3,300 U.S. consumers highlights stronger-than-expected consumer perception for Apple Intelligence, record-high U.S. iPhone upgrade rates, and strong interest in new iPhone form factors," Woodring said.
Those new iPhone forms include a rumored thin iPhone this fall and foldable model next year, he said.
In addition, future iPhone buyers are interested in artificial intelligence features, branded Apple Intelligence, in their next handsets. Some 54% of iPhone owners who are likely to upgrade their device in the next 12 months say it is extremely or very important to have Apple Intelligence on their next device. That's up from 34% in the September 2024 survey.
Woodring reiterated his overweight, or buy, rating on Apple stock with a price target of 220.
On the stock market today, Apple stock advanced 3.4% to close at 199.74.
Apple stock faces a number of speed bumps ahead, Woodring said. They include an "uncertain tariff policy, persistent China smartphone weakness, and legal/regulatory cases," he said.
Meanwhile, Apple is due to report its fiscal second-quarter results on May 1.
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