Jefferies' Edison Lee: Expectations for Apple Intelligence to start an upgrade cycle are too high

Core Viewpoint - Jeffre has downgraded Apple to "sell" from "hold," citing that current expectations for a super upgrade cycle are too high [1] Company Insights - The smartphone industry, including Apple and Android competitors, is facing a significant structural slowdown due to a lack of innovative features that current phones cannot perform [2] - Incremental improvements are noted, with excitement around Apple's upcoming foldable phone, although it is not a brand new form factor [3] - The expected volume for the foldable phone is projected to be around 3 million units, while iPhone sales could potentially be three times that due to a loyal customer base, but this may not significantly impact overall sales [4] - The lack of innovative features is seen as a primary reason consumers may not feel the need to upgrade their phones [5] Pricing Strategy - The iPhone 17 cycle has performed better than expected, primarily due to attractive pricing strategies, including no price increase for Pro and Pro Max models and effective price cuts for base models [7][8] - In China, the base model is sold at a lower price to qualify for government subsidies, which has driven more interest in the product [8] Market Sentiment - There is considerable enthusiasm regarding the upcoming foldable iPhone, with some investors believing that a replacement cycle is returning, despite structural headwinds [10] - The foldable phone is expected to be priced at $2,000, which may limit its mass market appeal [11]