Apple Intelligence Pushes Upgrade Cycle Of IPhone And IPad Faster

Apple Intelligence, requires a significant hardware and software upgrade (photo: x @XeZrunner)

JAKARTA - Apple Intelligence will turn Siri into iOS 18 and become an important catalyst for sales of iPhones and iPads. This was said by Morgan Stanley, who also declared Apple their top stake.

Apple Intelligence can be a revolutionary change in the way people use smartphones, but it requires users to have the latest devices. This is seen very well by Morgan Stanley analysts.

The prospect of Apple Intelligence in increasing device sales has helped push the company's share price target from 216 to USD 273. This increase also makes Apple the "Presidential Choice" of analysts for investors.

Apple Intelligence is a "clear catalyst for the multi-year product upgrade cycle," in part due to its limited backward compatibility. However, they also admit that they have "previously underestimated" how material this upgrade cycle is.

A new analysis from the firm shows that Apple can send nearly half a billion iPhone over the next two years, 6% higher than the full cycle of 2021 to 2022. At the same time, this could boost the growth of the annual average selling price by 5% to achieve total revenue of US$485 billion (Rp7,843.7 trillion) and profit per share of US$8.70 for the 2026 financial year.

Morgan Stanley explained that his high confidence in this large upgrade cycle call was due to a number of factors. In addition to a very large installation base of about 1.3 billion devices, the replacement cycle has been extended to 4.8 years.

In addition, this new technology is offered to "a small group of users," which is about 8% of iPhone and iPad users, stars appear to be sided with the supercycle.

To use Apple Intelligence, users need to upgrade to the iPhone 15 Pro or a newer model, which should benefit Apple with positive mixed shifts and ASP growth. For the financial year 2025 and 2026, it is estimated that 66% to 69% of the iPhone sent will be a new model, between 2 and 6 points above 2023 and 2024.

This can result in an annual ASP iPhone growth of 4% to 5%.

On the iPad side, only 24% can run Apple Intelligence, implying a "mini upgrade cycle" for tablets. This can shorten the iPad's replacement cycle to 3.8 years on average before COVID.

Apple Intelligence can also help increase Apple's fortunes in China, with new smart software layers potentially "triggering a strong upgrade." As long as Apple can find partners in China quickly.