Investing.com — Jefferies analysts expressed skepticism about Apple’s upcoming Apple Intelligence feature, suggesting it will not significantly boost iPhone 16 sales.
Apple is expected to launch the feature with iOS 18.1 on October 28, but “the features are not significant enough… to drive better iPhone 16 sales,” said Jefferies.
The analysts attribute this to hardware limitations and the small size of Apple’s AI model, which only utilizes 3 billion data parameters.
They expect Apple to introduce incremental AI upgrades in future updates through iOS 18.2 to 18.4 over the next six months.
Apple aims to roll out iOS 18.1 with AI in additional English-speaking countries by December, with further expansion into non-English markets planned for 2025.
Jefferies believes that Apple Intelligence is still in its early stages and predicts more substantial developments won’t materialize until 2026.
“ AI on device is still early days, and will only see a step-up in 2026 for iPhone (Android will be even later) as the hardware tech is commercialized,” the analysts wrote.
In terms of iPhone 16 sales performance, Jefferies highlighted some concerning trends. Delivery wait times for the new iPhone models have been shrinking, indicating soft demand, according to the firm.
In China, Jefferies said most iPhone 16 Pro models are now available immediately, a trend also observed in the U.S., where delivery times for the Pro and Pro Max models have shortened by 6-22 days.
Jefferies further noted that Apple may have reduced orders for key iPhone components, with supplier Largan Precision reporting weak 4Q24 expectations.
“It is highly likely AAPL has cut lens orders for iPhone,” said Jefferies, which could reflect subdued demand across the lineup.
Ultimately, with global smartphone growth decelerating, Jefferies maintains a cautious outlook, noting that more advanced AI hardware required to drive significant improvements is still years away. The firm has a Hold rating on Apple shares (NASDAQ:AAPL).
