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Apple’s iPhone 15 series for sale at The Grove Apple Store in Los Angeles, California. Wall Street is hoping the iPhone 16 will come with a major AI update.
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CNN
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In the four years since Apple introduced 5G connectivity with the iPhone 12, it hasn’t given users a strong reason to buy an upgraded iPhone — a worrying trend for the tech giant’s flagship business. That could change this week.
The iPhone brought in more than half of the company’s total revenue last year, but sales growth has slowed as customers delayed upgrading to newer models. The longer upgrade cycle — the length of time it takes for users to buy a new phone — is troubling many handset makers right now, but it’s been especially painful for Apple, which is dealing with a compounding challenge that includes fierce competition in its key market, China, and a landmark antitrust lawsuit.
Apple is expected to unveil new artificial intelligence features At its annual Worldwide Developers Conference on Monday, Products and Apple as a competitor again Many other companies in the technology industry They’re already committed to AI, and no product is more important to Apple than the iPhone.
The new AI features provide a compelling reason to upgrade when Apple launches the iPhone 16 this fall, and could give the company a boost at a crucial time.
The thing is, whatever the outcome on Monday, Apple isn’t going to lose its status as a tech giant anytime soon: The company made more than $200 billion last year from iPhone sales alone, its stock (AAPL) is up 9% over the past year, and it has a healthy services business that helps balance out the seasonality of its hardware sales.
But analysts say revitalizing iPhone sales is key to Apple’s continued growth.
“This can’t be a, ‘We’re going to do something cool later,’ announcement — and they know it,” DA Davidson analyst Gil Luria told CNN ahead of WWDC. “For Apple’s stock price to go up and for their business to grow, they need to hear from them why you should buy the iPhone 16.”
Investors are also hoping that Apple can prove it can hold its own in the fierce AI arms race at a time when the company has a much clearer strategy for the next big wave of technology development than many other companies.
“Timing is crucial for Apple, as Nvidia has overtaken Apple to become the second-largest technology company behind Microsoft,” Gadjo Sevilla, a senior analyst at eMarketer, said in emailed comments. Microsoft is also looking to compete more directly with Apple’s devices business with its new AI-powered PCs. “Any misstep by Apple at this point could cost them momentum as a technology leader.”
Apple has been incorporating AI in small, intangible ways into its products for years to make fans’ lives easier, but now the company is about to introduce its most consumer-facing AI update yet.
The company is widely expected to announce new generative AI features for iOS on Monday, specifically the company Siri personal assistant. Powered by AI, Siri could potentially perform certain tasks like calling up photos taken years ago on your device or answering detailed questions about the weather, news, and trivia. Over time, it could even learn your preferences and personality and respond accordingly.
Given that competitors have already begun integrating generative AI into their devices, Apple may also introduce other tools, such as the ability to summarize and draft emails.
Historically, Apple has not been the first to adopt new technologies, but rather the company that slowly rolls out premium experiences. Now the iPhone giant is under pressure to wow people with features that go beyond what rivals like Samsung and Microsoft have already introduced for smartphones and computers.
But beyond the features themselves, perhaps the biggest question coming out of WWDC is which Apple device owners will be able to use them: Will the new AI tools be available on older iPhones, or will they only work on new devices due to launch in the fall, presumably due to the need for powerful new chips and faster processors?
The latter scenario, assuming the features are compelling, could spark the next major iPhone upgrade cycle, with ripple effects across the company.
Luria said the company’s stock price could fall to $160 a share because of boring new features and AI capabilities available to anyone with an older iPhone. But if the company unveils exciting new technology in the fall that persuades users to upgrade, the stock price could rise to $240 a share. (Apple shares closed just below $197 on Friday.)
“That’s the key. If it’s attractive and not backwards compatible, Apple will be facing its first upgrade cycle in four years,” Luria said. “And that will have big implications for the stock price, because that’s the last time they had a big rally.”
