Apple poised for record Apple Intelligence-fueled iPhone upgrades – Morgan Stanley

Apple’s seamless integration of Apple Intelligence is fueling confidence among Morgan Stanley analysts who upgraded Apple to their Top Pick and set a new price target of $273 for Apple stock, as they anticipate a record-breaking upgrade supercycle for iPhones and iPads.
At WWDC in June, Apple introduced Apple Intelligence, the personal intelligence system for iPhone, iPad, and Mac that combines the power of generative models with personal context to deliver intelligence that’s incredibly useful and relevant. Apple Intelligence is deeply integrated into iOS 18, iPadOS 18, and macOS Sequoia. It harnesses the power of Apple silicon to understand and create language and images, take action across apps, and draw from personal context to simplify and accelerate everyday tasks. With Private Cloud Compute, Apple sets a new standard for privacy in AI, with the ability to flex and scale computational capacity between on-device processing and larger, server-based models that run on dedicated Apple silicon servers.
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“We see Apple Intelligence as the closest possible offering to a true smart virtual assistant in the market today,” Morgan Stanley analysts highlighted.
They project that Apple Inc. will ship 235 million iPhones in the fiscal year 2025 (FY25) and 262 million in FY26, which are 2-12% above consensus estimates. These forecasts are supported by the analysis of Apple’s extensive installed base and the potential for upgrades.
Only 15% of Apple’s current device base can support AI features, pointing to a significant opportunity for upgrades as users transition to devices equipped with the A17 Pro or M-series chips.
Morgan Stanley’s report also emphasizes that Apple is entering FY25 with the “largest iPhone upgradeable base in history.”
Analysts estimate that 31% of the 700 million upgradeable iPhones will be replaced within the next 12 months, driving the projected shipment numbers. In the US, where access to Apple Intelligence will be immediate, upgrade rates are expected to reach a record 36% in FY25.
Globally, the iPhone replacement cycle is poised to accelerate further in FY26, driven by broader language support for Apple Intelligence, additional software innovations, and new hardware features. This cycle is projected to result in 262 million shipments, which represents an all-time high and 12% above consensus estimates.

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MacDailyNews Take: The Mother of All iPhone Supercycles looms!
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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
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