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How the iPhone 16 With AI Could Send Apple's Market Value to $4T

Apple could be on track to reach a $4 trillion market capitalization with the artificial intelligence (AI) iPhone 16 upgrade cycle coming, Wedbush analysts said.

The analysts said the iPhone 16 supercharged with AI could bring a "golden upgrade cycle" for Apple.

Apple's recently announced iOS 18 with Apple Intelligence and OpenAI partnership are also expected to create monetization opportunities and increase share value.

Apple (AAPL) could be on the path to a $4 trillion market capitalization as an iPhone upgrade cycle approaches, driven by the iPhone 16 supercharged with artificial intelligence (AI) capabilities, according to Wedbush analysts.

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Apple's recently announced iOS 18 with Apple Intelligence and OpenAI partnership are also expected to create monetization opportunities and increase share value.

AI iPhone 16 Upgrade Cycle Coming Soon

Wedbush analyst said that an AI iPhone 16 could bring "a golden upgrade cycle for Cupertino looking ahead with pent-up demand building globally."

"The Street is now starting to slowly recognize that with Apple Intelligence on the doorstep in essence Cupertino will be the gatekeepers of the consumer AI Revolution," they said, with 2.2 billion iOS devices globally and 1.5 billion iPhones.

Wedbush suggested a "consumer AI tidal wave" could start with the iPhone 16 in mid-September, adding that estimates indicate 270 million iPhones users have not upgraded in over four years.

Recovery in China To Support Upgrade Cycle

The analysts indicated that iPhone supply stabilization in Asia is also "a very good sign heading into a monumental iPhone 16 upgrade cycle."

Wedbush's projections come amid ongoing concerns for the iPhone maker in the China region amid increased competition, though there have been recent signs of improving shipments.

They projected that June "will be the last negative growth quarter for China with a growth turnaround beginning in the September quarter," when the iPhone 16 is expected to be released.

AI and iOS 18 Could Also Boost Share Value

Apple unveiled iOS 18 supercharged by Apple Intelligence and an AI partnership with OpenAI at its developers' conference in June.

Wedbush analysts said the partnership with the Chat-GPT maker "creates the highway for developers around the globe to focus on iOS 18 and this in turn will create a myriad of monetization opportunities for Cook & Co. over the coming years."

The analysts estimated that "this could result in incremental Services high margin growth annually of $10 billion for Apple" driven by hardware and software.

They added they believe "AI technology being introduced into the Apple ecosystem will bring monetization opportunities on both the services as well as iPhone/hardware front and adds $30 to $40 per share."

Apple shares were little changed in early trading Monday, though they have gained more than 17% since the start of the year.

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Audi RS e-tron GT intelligent cockpit innovation analysis
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They are mainly from the Netherlands, Taiwan island, South Korea, and Japan, most of which are in the Western Pacific. These countries and regions are heavily influenced by the US. Although these companies have their own expertise, they still use some American technologies in their products. Therefore, Washington quickly persuaded them to form an alliance to collectively prevent the Chinese mainland from obtaining chips and manufacturing technology. Washington is proud of this and wants to continuously tighten the noose on China. The New York Times directly titled an article "'An Act of War': Inside America's Silicon Blockade Against China, " in which an American AI expert, Gregory Allen, publicly claimed that this is an act of war against China. He further stated that there are two dates that will echo in history from 2022: The first is February 24, when the Russia-Ukraine conflict broke out, and the second is October 7, when the US imposed a sweeping set of export controls on selling microchips to China. China must abandon its illusions and launch a challenging and effective counterattack. We already have the capability to produce 28nm chips, and we can use "small chip" technology to assemble small semiconductors into a more powerful "brain," exploring 14nm or even 7nm. Additionally, China is the world's largest commercial market for commodity semiconductors. Last year, semiconductor procurement in China amounted to $180 billion, surpassing one-third of the global total. In the past, China had been faced with the choice between independent innovation and external purchases. Due to the high returns from external purchases, it is easy for it to become the overwhelming choice over independent research and development. 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"If the controls are successful, they could handicap China for a generation; if they fail, they may backfire spectacularly, hastening the very future the United States is trying desperately to avoid," it argued. Whether it is a war or a game, when the future is uncertain, what US companies hope for most of all is that they can sell simplified versions of high-end chips to China, so that the option of external purchases by China continues to exist and remains attractive. This can not only maintain the interests of the US companies, enabling them to obtain sufficient funds to develop more advanced technologies, but also disrupt China's plans for independent innovation. This idea is entirely based on their own commercial interests and also has a certain political and national strategic appeal. Hence, there is no shortage of supporters within the US government. US Secretary of the Treasury Janet Yellen seems to be one of them, as she has repeatedly stated that the US' restrictions on China will not "fundamentally" hurt China, but will only be "narrowly targeted." The US will balance its strict suppression on China from the perspective of maintaining its technological hegemony, while also leaving some room for China, in order to undermine China's determination to counterattack in terms of independent innovation. China needs to use this mentality of the US to its advantage. On the one hand, China should continue to purchase US chips to maintain its economic fundamentals, and on the other hand, it should firmly support the development of domestic semiconductor companies from both financial and market perspectives. If China were to continue relying on exploiting the gaps in US chip policies in the long term, akin to a dependency on opium, it would only serve to weaken China further as it becomes increasingly addicted. China's market is extremely vast, and its innovation capabilities are generally improving and expanding. Although the chip industry is highly advanced, if there is one country that can win this counterattack, it is China. As long as we resolutely continue on the path of independent innovation, this road will definitely become wider. Various breakthroughs and turning points that are unimaginable today may soon occur.