Investing

Here’s When the Big iPhone Supercycle Will Start According to Apple Expert

Joey Frenette

Published: November 18, 2024 1:12 pm

Apple (NASDAQ:AAPL) stock has sat out the Trump rally, at least on a relative basis. Undoubtedly, potential Trump tariff fears may be a concern for some. For others, it’s Warren Buffett’s selling activity, which may have more to do with asset allocation, taxation, and something else entirely rather than anything to do with the company specifically. Either way, we can only speculate for now as to the exact reason why Buffett sold so much stock and how Apple will truly fare under a Trump presidency.

For now, it seems like investors are mostly put off by the uncertainty as the company looks to unlock the power of artificial intelligence (AI) to help it boost iPhone (and other device) sales going into the new year.

Key Points About This Article

• Apple Intelligence is huge catalyst that’s tough to gauge right now.
• Gene Munster thinks investors should look to the June 2025 quarter for an AI-induced iPhone demand acceleration.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Apple Intelligence: It’s likely the start of something special

Undoubtedly, it will be interesting to see how the ChatGPT integration, Image Playground, and Genmoji features go once iOS 18.2 goes live this December. Personally, I think the AI features could be a huge time saver for those who’ve incorporated large language models (LLMs) as a part of their everyday lives. Indeed, having ChatGPT integration on Apple Intelligence could put people closer to AI than ever before.

As hefty an update as iOS 18.2 will be, I’m even more bullish about future updates, as they could take Apple Intelligence to new levels. Indeed, Apple Intelligence isn’t just a one-and-done type of update. It’s one that will get better with every major iOS update. In a few years, perhaps Apple Intelligence could be a gold standard of sorts when it comes to personalized, consumer-facing AI.

With that in mind, I think consumers should temper their expectations with the initial release of Apple Intelligence, as it’s the very first version of a product that is bound to improve by a profound magnitude over time.

Apple is playing it long-term with AI

Whether Apple Intelligence goes its own way (think an in-house model that replaces ChatGPT in a few years) in the future or stays partnered with OpenAI for the long haul remains the big question. Either way, Apple seems to be getting a sweet deal by teaming up with OpenAI, one that may help Apple achieve an enviable return on investment in its AI efforts.

Recently, Evercore ISI analyst Amit Daryani recommended Apple as a buy. Apple Intelligence’s long-term potential was a major reason why. Though Daryani thinks it’s “unlikely” a super cycle will happen this year, he does view Apple Intelligence as playing “more of a long game” and that iPhone sales will be “ticking higher as more AI features are added.”

I think Daryani is absolutely right. This is just the start of Apple Intelligence, with so many more advancements poised to come in the future. As these innovations lands, one has to think device sales will get a jolt.

So, when will that iPhone supercycle finally start?

The big question for now, however, is just when the supercycle will kick off. The latest quarter, though decent, saw no iPhone super cycle. And until there’s more clarity on when it’ll arrive, the stock could stay rangebound for some time.

Deepwater Asset Management managing partner, Gene Munster, has a date in mind for when a supercycle could begin. He’s looking for the June 2025 quarter to be the start of an Apple Intelligence-driven super cycle in iPhone. Additionally, Munster thinks significant growth could carry into fiscal year 2026.

Undoubtedly, Munster is more bullish than most other analysts covering the name. But I’m a big fan of his work and think there’s a good chance he’ll lead the wave of upgrades as other Wall Street analysts better realize the growth potential of Apple Intelligence going into 2025.

Perhaps the iPhone 17 Pro launch (expected in late 2025) could be the device that really sees heated demand. Though the iPhone 16 Pro is designed with Apple Intelligence in mind, I can’t help but wonder if the next iteration of the device marks a much bigger leap in AI hardware compared to the jump from 15 to 16.

Either way, I think Munster is right to be more bullish on Apple Intelligence. It seems to be an impressive offering that many others are sleeping on amid its initial release. The June quarter could be the start of what investors and analysts have been waiting for since Apple Intelligence was first unveiled.

In the meantime, I view AAPL stock as a solid value that may be worth hanging onto well before the summer of 2025. At 37.5 times trailing price-to-earnings, AAPL shares seem too cheap for a catalyst this big that’s immediately up ahead.