When longtime tech sector analyst Dan Ives of Wedbush speaks, investors tend to listen. He's one of the more prominent voices in stock punditry, and more than a few of his calls have proved to be accurate.
So the market noticed when Ives waxed bullish on the next phase of Apple's (NASDAQ: AAPL) development, which he believes will be an upgrade "supercycle" starting with the just-introduced iPhone 16. The analyst feels that masses of people currently using older iPhone models will be eager to switch to the 16, mostly because of one feature that should produce a surge in demand.
An even more intelligent smartphone
That feature is Apple Intelligence, which, as the name strongly implies, is the tech giant's artificial intelligence (AI) platform. Apple Intelligence is to be packed into all iPhones starting with the 16. So far it's been something of a rare bird, with access limited to the high-end iPhone 15 Pro series.
Ives wrote, in a research note on the company, that users of old iPhones won't be able to resist the lure of AI. Brisk sales of AI-stuffed iPhone 16s should result and, as a consequence, developers will create hundreds of AI-powered apps for Apple's iOS. This will make the company an important driver, or the important driver, of AI development in the vast consumer sphere. In turn, this should significantly boost Apple's fundamentals and crank up demand for its stock.
"We believe [Wall] Street is starting to slowly recognize that with Apple Intelligence on the doorstep in essence Cupertino will be the gatekeepers of the consumer AI revolution," the analyst wrote in late August, just before the iPhone 16's introduction.
According to Ives's research, around 300 million iPhone users have not upgraded their hardware in more than four years (all told, there are 1.5 billion iPhones in this world, according to his estimates, forming the bulk of the 2.2 billion Apple devices in total). Assuming his prediction comes true, the company could indeed see sudden, skyrocketing demand from folks wanting the 16. He put a dollar figure on this, forecasting that Apple stands to reap $30 to $40 per share in monetization opportunities from AI alone.
Curb your enthusiasm
Like a host of tech companies, incumbent and upstart alike, Apple is pushing hard to be a first-mover in mass-market AI. For all its size, reach, and power, though, pole position is by no means guaranteed. To cite but one example, Apple's peer/rival Microsoft has developed and deployed Copilot, a suite of AI tools that is being integrated into a wide range of that company's software and services.
Like the iPhone 16 with Apple Intelligence, Microsoft is baking a version of Copilot into hardware too. In May it introduced a new series of Windows PCs that will have its Copilot+ pre-installed. The AI revolution might end up being spearheaded not by iPhones and iPads but by desk jockeys using Windows PCs -- which are so common in homes and workplaces as to be nearly ubiquitous.
So while Ives's enthusiasm is understandable given Apple's big AI lunge, at this point no one should be ready to award the company the gold medal. Generative AI takes some time to get the hang of, and to master, so I don't envision it being a sudden killer app. I also don't get the sense that most consumers are frothing at the mouth to have an AI phone. The tech is still relatively new, and even if many are aware of its potential, they might not find it sufficiently useful and applicable to their lives (at least, not yet).
That being said, AI will certainly be a draw to a segment of the iPhone user base and, to some degree, help attract new users. I think this demand is more likely to play out as an initial slow burn before advancing in a long-term rise; ditto for AI's impact on Apple's results and the popularity of its stock. So as a current Apple shareholder I'm encouraged by what AI might be able to do for its future. I'm just not ready to get overly excited about it at this early stage.
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Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Dan Ives Predicts an Apple "Supercycle" With the New AI-Optimized iPhone. What Could This Mean for the Stock? was originally published by The Motley Fool