Apple on Monday unveiled the AI-enhanced iPhone 16 — but Wall Street is divided on whether it will be able to reverse declining sales for the tech giant’s flagship product.
Dubbed “Apple Intelligence,” the firm’s artificial intelligence push was front and center during the high-profile presentation at its headquarters in Cupertino, California. The latest model features an A18 chip designed to power large generation models and a customizable “action button” that can be paired with different tasks, such as voice translation, and a new dedicated “camera control” button .
However, the first AI software features won’t be available in beta to iPhone users until next month — more than a week after the phone hits stores on September 20. More updates, including an overhaul of the Siri voice assistant and Apple’s collaboration with ChatGPT, are said to follow early next year.
“The next generation of iPhone is designed for Apple Intelligence from the ground up,” said CEO Tim Cook during the company’s presentation. “This marks the beginning of an exciting new era.”
The base iPhone 16 costs $799, while the iPhone 16 Plus is slightly more expensive at $899. The most powerful iPhone 16 Pro and Pro Max models start at $999 and $1,119. The phones are available for pre-order on Friday and will hit shelves on September 20.
Apple is backing artificial intelligence to drive a new round of phone improvements. The company posted a remarkable 10% year-over-year decline in iPhone sales in its second-quarter results reported last May — the worst decline since the COVID-19 pandemic triggered a global economic slowdown.
Touted AI features include improved writing tools that can rewrite or correct posts, automatically generate email summaries, and the ability to create emojis and other animated images through written prompts.
Strong competition from smartphone rivals in China has led Apple to rely on handset discounts on some models in a bid to boost demand. Ironically, Apple Intelligence will not initially be made available in China or the European Union due to regulatory concerns.
Apple shares were down about 1% in midday trading on Monday after the event ended.
To win over customers, Apple will need to convince the public that the AI features in its smartphones are more than a fad, according to Mark Vena, CEO and principal analyst at SmartTech Research.
“Consumers may still be somewhat resistant because of the privacy and confidentiality hurdles that need to be overcome to take full advantage of the benefits of AI in the new iPhones, but I feel that because Apple has historical brand trust with consumers , the moment will increase quickly. , said Vena.
The iPhone 16’s AI improvements could “help drive more interest in the new lineup, but the delay in some of the features could mean more people wait until they see the features as well,” said Ben Bajarin, CEO and analyst major in Creative Strategies.
“I think the jury is out on whether this iPhone cycle can deliver a stronger-than-usual cycle,” Bajarin added. “But I think there’s good reason to believe that the legacy base, along with very aggressive carrier promotions, should see a good portion of their base upgrade, given that a large of the base is on phones 3.5+ years old.”
Wedbush analyst Dan Ives, a prominent Apple bull, said in a note that initial supply chain checks for the iPhone 16 suggest sales are “much stronger” than they were for last year’s model.
He estimated that initial shipments could top 90 million units — higher than Wall Street’s expectations of 80 million to 84 million.
“We continue to see further indications across the Asia supply chain that this iPhone upgrade cycle could be a historic one, setting the stage for a super-cycle as we currently estimate that around 300 million iPhones worldwide are not improved in more than 4 years,” Ives. said a note to customers.
Ives rated the stock an “outperform” and set a price target of $285 per share.
In addition to the new iPhone models, the company announced updated versions of the Apple Watch and AirPods.
The Apple Series 10 Watch costs $399 and was billed as the thinnest version of the device ever, with a larger display and new features including sleep apnea detection. A premium edition, the Apple Watch Ultra 2, costs $799.
AirPods 4, which are designed to be more comfortable to wear than previous versions, start at $129. A version with active noise cancellation capabilities costs $179.
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