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Jeff Chiu/AP
- Analysts noted that the iPhone 16 does not introduce significant new features, and a true AI smartphone is still years off.
- Following this assessment, Apple’s stock experienced a decline of 2.3% after Jefferies downgraded its rating from buy to hold.
- Despite these challenges, analysts maintain a positive outlook for the iPhone’s long-term prospects.
A recent analysis has echoed sentiments shared by some Apple enthusiasts: the iPhone 16 falls short of expectations, and it will be some time before we see an authentic AI smartphone on the market.
In their report released on Sunday, Jefferies analysts pointed out that the absence of innovative features in the iPhone 16 and its limited integration of artificial intelligence could hinder sales performance compared to previous models. They predict that it may take another two to three years before we witness a fully functional AI-enabled smartphone.
“Anticipating an accelerated replacement cycle for smartphones driven by AI at this stage is overly optimistic,” stated Edison Lee and his team. Consequently, they revised Apple’s rating from buy to hold.
The announcement led to a drop in Apple’s stock price by 2.3% on Monday as investors reacted to these insights.
The sales figures for iPhones are particularly crucial since they account for nearly half of Apple’s overall revenue stream.
This year’s optimism surrounding Apple was largely fueled by their June unveiling of “Apple Intelligence,” which represents their approach towards artificial intelligence technology. Over the past six months, shares have surged more than 30%, partly due to excitement over advancements in AI capabilities.
However, enthusiasm waned when Bloomberg reported in July that Apple Intelligence would not be included with the new iPhone 16 model. Instead, users will need to wait until October for software updates introducing features like an enhanced Siri powered by AI and an image generation tool.
In his latest note, Lee projected “minimal growth” in sales volume during the latter half of 2024 when comparing it with last year’s iPhone 15 launch; he anticipates only about a 2.5% increase over its lifecycle volume as well.
Not all experts believe that delaying Apple Intelligence’s rollout will negatively impact overall performance; some argue it’s merely one aspect among many within Apple’s extensive product range.
“It’s akin to trying to assess an elephant’s weight based solely on a few strands of hair,” remarked Gil Luria from D.A. Davidson regarding third-party reports about iPhone sales figures last month. He expressed skepticism towards such external evaluations concerning demand for the new model.
Edison Lee also acknowledged potential benefits associated with integrating AI into future iterations but emphasized that immediate impacts might be limited at present timeframes.
He highlighted Apple’s unique position as “the sole player combining hardware and software integration within smartphones,” expressing enthusiasm about what lies ahead regarding their long-term capabilities involving artificial intelligence technologies.
Lee estimates there could be around 490 million devices equipped with AI functionalities by mid-2026—growing further up towards approximately 845 million units by late-2027—based upon Counterpoint research data indicating 45.5 million phones sold during Q2 ending June this year alone!
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