Apple (NASDAQ:AAPL) bulls appear to be in retreat again with the stock down by 11% this week. The tech giant has been facing a variety of headwinds in recent times, including uncertainty around tariffs given its significant exposure to the Chinese market, and regulatory risks to its profitable partnership with Google.
Adding to the turbulence, Apple is running into hurdles with its iPhone roadmap. The company revealed that several highly anticipated features, showcased last June – such as Siri’s enhanced ability to access personal user data for answering questions and more accurate app control – are now delayed until sometime in the coming year. While Apple had not previously committed to a public release date, these capabilities were originally intended to debut with the iOS 18.4 update in April.
Morgan Stanley analyst Erik Woodring warns that the delay could curb iPhone upgrade rates over the next year, falling short of his previous expectations.
“Apple will have fewer features to accelerate iPhone upgrade rates in FY26, and as a result, we reduce our CY25/CY26 iPhone shipments 1- 5%, to 230M and 243M, respectively,” the analyst explained.
Siri forms a big part of Woodring’s expectations for the iPhone, and the delay puts a serious dent in his thesis. A recent MS survey (the AlphaWise Smartphone survey) shows how important Siri is for users. For the first time, “Access to Advanced AI Features” ranked among the top five reasons for smartphone upgrades. Additionally, prospective iPhone buyers (globally) showed the most interest in an “Upgraded Siri digital assistant” as part of Apple Intelligence features.
Moreover, around 50% of iPhone owners who chose not to upgrade to the iPhone 16 admitted that the delayed rollout of Apple Intelligence influenced their decision. Our previous iPhone forecast assumed that the iOS 18.4 launch in April 2025 would introduce a more advanced Siri with expanded Apple Intelligence language support, driving higher upgrade rates this fall.
As such, due to the fact a more advanced Siri is now unlikely to be available before the iPhone 17 launch, Woodring believes it makes sense to lower upgrade rate assumptions and FY26 estimates.
“That’s not to say other factors cannot support iPhone growth in FY26,” he goes on to add, “but without a ‘killer AI app’ in market ahead of the iPhone 17 launch, we don’t see AI features contributing to accelerating upgrade rates as meaningfully as we did previously.”
With this revised outlook, Woodring has trimmed his price target on AAPL from $275 to $252, still implying a 20% upside from current levels. His rating remains an Overweight (i.e., Buy). (To watch Woodring’s track record, click here)
Wall Street, on the whole, echoes a similar sentiment. Among analysts covering AAPL, 18 rate it a Buy, 11 say Hold, and 4 recommend Selling, culminating in a Moderate Buy consensus rating. The average price target of $250.20 suggests a 19% upside over the next 12 months. (See AAPL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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