Apple's 'golden' AI-driven iPhone upgrade cycle isn't looking so shiny

Apple Intelligence Launch and Market Expectations - Apple introduced its AI venture, Apple Intelligence, in June 2023, with availability limited to iPhone 15 Pro models or later, potentially driving a "golden upgrade cycle" [1] - Initial hype around Apple Intelligence led to bullish sentiment on Apple stock, but full capabilities are yet to be realized [2][3] - Analysts have adjusted expectations, with some predicting a "super cycle" of iPhone upgrades in late fiscal 2025 or fiscal 2026 [3][5] iPhone Sales and Consumer Response - iPhone 16 series sold approximately 37 million units during its first preorder weekend, a 12.7% year-over-year drop compared to the iPhone 15 [4] - Consumers appear unmoved by AI functionality, with no significant signs of an upgrade cycle [7][9] - Apple has yet to capitalize on the initial hype of Apple Intelligence, with concerns over consumer excitement around AI [7][8][9] Analyst Perspectives and Market Reactions - Gene Munster of Deepwater Asset Management believes Apple Intelligence will play a significant role in a potential super cycle, though not in 2025 [3] - Morningstar's William Kerwin noted a shift from initial excitement to expectations of tepid growth in the first year, with more aggressive expectations for the second year [4] - Apple received a rare downgrade to "sell" due to a lack of consumer excitement around AI, according to Craig Moffett of MoffettNathanson [9] Financial Impact and Future Outlook - Apple's fiscal Q4 2024 earnings period ended shortly after the iPhone 16 launch, making it too early to assess the revenue impact of Apple Intelligence [5] - Investors will gain a clearer view of Apple Intelligence's impact when the company reports Q1 2025 data on January 30 [5]