Will Apple's September Event And Upcoming iPhone 16 Start A 'Historic Upgrade Cycle'?

Apple is set to unveil some new products at the It's Glowtime fall event next Monday. Roughly a week from now, how Apple will integrate Apple Intelligence into its latest product lineup has become a focal point for analysts.

Morgan Stanley analyst Erik Woodring thinks "Apple Intelligence" remains key to unlocking pent-up iPhone demand and accelerating the replacement cycle. He expects Apple's September event to highlight AI integration on the new iPhone 16, although the pricing and battery life of the iPhone will also be key details to watch.

It is understood that Apple Intelligence is an artificial intelligence platform that will be used in Apple's iOS 18, iPadOS 18, and macOS Sequoia. The event may also introduce new Apple Watches and AirPods and could reveal details about changes in the trade-in value of iPhones.

Apple CEO Tim Cook said when launching Apple Intelligence in June: Our unique approach combines generative AI with the personal context of users, providing truly useful intelligence that can access this information in a completely private and secure manner, helping users do what matters most to them.

Although Morgan Stanley expects no significant difference in market reaction after this year's event, the firm does believe that the launch of the iPhone 16 could release pent-up demand and accelerate the iPhone replacement cycle. The number of upgradable iPhone users has increased by 40% compared to the pre-5G cycle.

Woodring pointed out that the iPhone's replacement cycle has also reached a peak of 4.8 years, which increases the likelihood of iPhone replacement upgrades in the next 3-12 months, a key factor supporting Apple as our top pick.

Wedbush also has high expectations for this iPhone replacement cycle, with analysts noting that the event will kick off the largest upgrade cycle in Apple's history.

Wedbush currently estimates that the initial shipment volume of the iPhone 16 will exceed 90 million units, surpassing market expectations of between 80 million and 84 million units, marking a double-digit year-over-year increase.

The firm estimates that there are about 300 million iPhones worldwide that have not been upgraded in over four years, laying the foundation for a significant surge in demand. Additionally, Wedbush analysts believe that with the upcoming launch of Apple Intelligence, Apple could become the gatekeeper of the consumer AI revolution.

In the next 6 to 12 months, Wedbush expects developers to create hundreds of applications driven by generative AI, which could significantly contribute to Apple's success. This integration could bring about a high-profit annual growth of about $10 billion for Apple's services division.