In a new note to investors, HSBC says that the slow rollout of the AI features Apple introduced at WWDC 2024 has so far “failed to trigger significant improvement in user experience,” and that unless Apple gets back on track, users could end up pushing off their next iPhone upgrade. Here are the details.
According to the note (via MacDailyNews), “the iPhone still represents about half of Apple’s sales,” but “initial hopes that AI would accelerate the renewal cycle have been short-lived,” as the company’s AI offerings have “so far failed to trigger significant improvement in user experience.”
Interestingly, the bank’s note contradicts a recent CIRP report, which claimed that “only 13% of US iPhone buyers reported upgrading specifically to take advantage of new features,” while “40% of buyers indicate they purchased their new iPhone because of a problem with their old one,” and “27% replaced a phone that was completely inoperable or was lost or stolen.”
Still, as noted by Yahoo Finance, HSBC warned that “delays in launching the AI-powered Siri may lead many users to postpone handset upgrades.”
HSBC notes that Apple may have to turn its focus on more traditional hardware spec bumps as part of its iPhone 17 story, if it hopes to boost sales:
“Better specs with iPhone 17 in September should entertain the demand, in-line with what has been seen with the iPhone 16.”
And speaking of tariffs, the bank highlights rising tariff-related tensions as a key risk, noting that Apple “cannot re-localize production fast enough.” It also estimates a 20% tariff impact on Chinese imports.
In the report, HSBC maintained a Hold rating on Apple stock with a $220 price target. Shares are currently trading at $211.18, roughly the same range they’ve been in for the past three months.
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