A new Morgan Stanley report seen by BGR suggests that Apple Intelligence could be responsible for dramatically boosting iPhone and iPad sales. The firm expects around 235 million iPhones to be shipped in 2025, and another 262 million units will ship in 2026.
Morgan Stanley analysts forecast an 11% revenue bump from 2024 to 2026 and 8.70 EPS in 2026, supporting a $273 price target. According to the firm, “Apple can spur a multi-year device refresh cycle for Apple. However, what we had previously underestimated, and what the market still underappreciates today, is just how material the impending upgrade cycle can be.”
The analysts are so convinced that a supercycle is coming because Apple never had such a large iPhone installed base. Replacement cycles have been so extended, and new technology has been limited to such a small cohort of users.
“We estimate that by the fiscal year 2024 end, nearly 700M iPhones will be 3 years or older (the ‘upgradeable base’), an all-time record and 10% larger than the prior FY23 peak. Of that base, one-third of potential upgraders are in North America, where Apple Intelligence will be available this fall, while two-thirds of potential upgraders are located internationally, where Apple Intelligence will not be immediately available this fall.
In addition, the iPad market could also have its own mini cycle, as only 24% of iPads today can run Apple Intelligence. “iPad replacement cycles can contract to 3.8 years, or the pre-COVID average. So, while growth in iPhone units will account for 36% of Apple’s total revenue growth through FY26, higher iPhone ASPs and iPad growth will account for another 26% of total revenue growth.”
That said, Morgan Stanley thinks Apple is a “top pick” for investors, even though the company’s stock is already at a record high. Apple Intelligence is rumored to make a debut this week in beta. You can learn all about Apple’s iPhone AI in our guide on Apple Intelligence.
