Apple’s AI-powered features, collectively known as Apple Intelligence, are expected to drive significant iPhone 16 sales over the next year, despite not being available at the device’s September 20 launch. Analysts remain bullish on the iPhone 16’s prospects, even as early pre-order data suggests softer initial demand compared to last year’s iPhone 15.
Early indicators show mixed signals for the iPhone 16 launch. BofA Global Research analysis revealed shorter average global shipping times for iPhone 16 models compared to the previous year, suggesting lower immediate demand. Apple supply chain expert Ming-Chi Kuo reported that first-weekend pre-order sales declined approximately 12.7% compared to the iPhone 15 series. However, industry analysts are dismissing these early metrics as unreliable indicators of long-term success.
Gil Luria, an Apple analyst for D.A. Davidson, emphasized that Apple Intelligence remains “the big driver” for iPhone 16 sales. He compared the potential impact to the iPhone 12’s 5G launch four years ago, which boosted sales by 40% over the iPhone 11. Luria told Business Insider he puts “very little credence” in third-party reports for gauging demand, calling it an “exercise in futility” and comparing it to “trying to weigh an elephant by a few of its hairs.” The key difference, he noted, is that Apple Intelligence won’t be available out of the box, with features rolling out through software updates starting in October.
Wedbush Securities analyst Dan Ives projects an “AI-driven iPhone supercycle” that could propel Apple into $4 trillion market cap territory. According to Ives’ Asian supply chain checks, the iPhone 16 upgrade cycle will reach over 90 million units on initial launch, up roughly 8-10 million units from iPhone 15. He estimates that 300 million of Apple’s 1.5 billion iPhone users haven’t upgraded in four years, creating what he calls “a golden opportunity for Cupertino.”
Consumer sentiment appears cautiously optimistic about the AI features. Customers at Apple stores in San Francisco and New York indicated that Apple Intelligence wasn’t their primary motivation for upgrading. San Francisco resident Ron Witt expressed interest in the new camera features while remaining “intrigued” rather than excited about the AI capabilities. Luria suggested that Apple Intelligence won’t gain widespread popularity until users can actually experience it, drawing parallels to ChatGPT’s public release in 2022 that sparked mainstream AI adoption.
Key Quotes
Apple Intelligence is still the big driver
Gil Luria, Apple analyst for D.A. Davidson, emphasized this point to Business Insider, indicating that despite the delayed launch, AI features remain the primary catalyst expected to drive iPhone 16 sales over the next year.
It’s like trying to weigh an elephant by a few of its hairs
Luria used this analogy when dismissing early pre-order data as unreliable indicators of iPhone 16 demand, suggesting that analysts should focus on longer-term trends rather than initial sales figures.
Based on all of our recent Asian supply chain checks this iPhone 16 upgrade cycle will be over 90 million units on initial launch and be up roughly 8 million to 10 million units from iPhone 15
Wedbush Securities analyst Dan Ives provided these specific projections in a memo, backing his prediction of an “AI-driven iPhone supercycle” that could push Apple’s market cap to $4 trillion.
This a new type of functionality and product where until people start using it, they won’t know they need it
Luria compared Apple Intelligence’s adoption curve to ChatGPT’s 2022 public release, suggesting that hands-on experience will be crucial for driving consumer demand rather than pre-launch marketing.
Our Take
Apple’s staggered AI rollout represents a calculated risk that could redefine product launch strategies in the AI era. Unlike traditional hardware features that must work perfectly at launch, Apple is betting that the promise of AI capabilities will sustain sales momentum across multiple software updates. This approach acknowledges AI’s complexity while maintaining upgrade pressure on consumers with aging devices. The 40% sales boost comparison to iPhone 12’s 5G launch sets ambitious expectations, but the real test will be whether Apple Intelligence delivers tangible value that justifies upgrades. The lukewarm consumer enthusiasm at launch—with buyers citing cameras over AI—suggests Apple faces an education challenge. However, if Apple Intelligence proves transformative in daily use, it could validate AI as the next essential smartphone feature and trigger the predicted supercycle. The stakes extend beyond Apple: success here could accelerate AI integration across consumer tech, while failure might temper industry enthusiasm for AI-first marketing strategies.
Why This Matters
This story represents a pivotal moment in consumer AI adoption and the smartphone industry’s evolution. Apple’s entry into the AI smartphone market validates the technology’s mainstream potential and could accelerate the integration of AI features across consumer devices. With an estimated 300 million iPhone users overdue for upgrades, Apple Intelligence could trigger the largest upgrade cycle in years, demonstrating AI’s power as a sales driver in consumer electronics.
The delayed rollout strategy also reveals important insights about AI deployment challenges. Even tech giants like Apple face hurdles in delivering polished AI experiences at launch, suggesting the technology remains complex to implement at scale. The comparison to 5G’s 40% sales boost for iPhone 12 sets high expectations, but the staggered release approach may actually extend the upgrade cycle over months rather than creating immediate demand spikes.
For the broader tech industry, Apple’s success or failure with Apple Intelligence will influence how other manufacturers position AI features and whether consumers view AI capabilities as essential rather than novelty features. This could determine the pace of AI integration across smartphones, tablets, and other consumer devices in the coming years.
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