As Apple's share price continues to rise and its market capitalization is on the verge of hitting the $4 trillion skyline, analysts are saying the introduction of generative AI (Apple Intelligence) could be a key driver for the tech giant to move towards a supercycle. While the iPhone 16 series had undergone relatively few design changes and failed to deliver disruptive innovations, Apple is quietly laying out future growth potential by strengthening its AI capabilities, especially in the combination of services and smart hardware.
iPhone 16 series: big expectations with small improvements
Judging from the release of the iPhone 16 series, Apple has not made subversive design changes. Compared with the iPhone 15 series released last year, the hardware changes of the new model are not significant, and more improvements are focused on the user experience, such as a stronger processor, longer battery life, optimized camera system and other detailed adjustments. These improvements have not caused massive market volatility, and many analysts have said that the iPhone 16 series may not be as dramatic in the short term as it was when the early iPhones were released.
However, Apple didn't stop at the lack of revolutionary change. As industry observers have pointed out, Apple's real trump card isn't in the hardware, but in its progress in generative AI — Apple Intelligence. Analysts generally believe that although the iPhone series may be affected by some market weakness in the short term, as Apple's Intelligence feature matures and becomes popular, the demand for the iPhone will usher in a long-term growth cycle, pushing Apple into a "super cycle" stage.
Generative AI: Apple's future growth engine
The introduction of Apple Intelligence is expected to be an important engine for Apple's future growth. This feature is not a simple voice assistant upgrade, but an intelligent assistant that integrates multiple generative AI technologies to more intelligently understand and anticipate user needs and provide more personalized services. The technology can be seamlessly integrated with hardware such as iPhones, Macs, iPads, etc., further strengthening the ecosystem of Apple products and increasing user stickiness through AI-driven innovation.
Although Apple Intelligence has been slow to roll out features, with all features in iOS 19 not expected to be fully implemented until 2026 at the earliest, the potential is huge. As technology continues to iterate, Apple Intelligence will be more than just voice control, but may involve more complex tasks such as generating content, image recognition, personalized recommendations, and more. In the long run, this will greatly increase the added value of the iPhone and make Apple's hardware and software more tightly bound, driving overall sales.
Figure: Apple is on the verge of a $4 trillion market capitalization Generative AI and the potential of the iPhone supercycle
Services: Apple's new revenue pillar
In addition to hardware, Apple's continued growth in the service sector has also provided strong support for the increase in its market value. According to the analysis, Apple's services business has become an important part of its revenue, and it is expected that by 2025, the revenue of the services division will reach $100 billion, accounting for about 25% of the total revenue. Through services such as the App Store, Apple Music, iCloud, and more, Apple has successfully transformed into a diversified business that no longer relies solely on hardware sales.
In particular, Apple's services division has not only brought in stable cash flow, but also provided the company with greater resilience to risks. In the midst of cyclical fluctuations in hardware sales, service revenue provides Apple with a predictable and growing revenue stream. Wedbush analysts predict that Apple's services business will reach a market valuation of $1.5 trillion to $1.6 trillion by the end of 2024, a valuation increase that provides solid support for the company's overall market capitalization.
The Chinese market: potential challenges and opportunities
For Apple, the Chinese market has always been one of the key regions for its growth, especially when it comes to iPhone sales. As the world's largest smartphone market, demand in China is critical to Apple's financial performance. However, the challenges facing Apple in China cannot be ignored, especially in the rollout of generative AI capabilities, and due to regulatory restrictions, Apple's cooperation with Chinese local tech giants such as Tencent and ByteDance has become increasingly important. The analysis points out that Apple may work with these companies to bypass China's regulatory hurdles and speed up the localization and rollout of AI features.
Still, as demand for Apple products grows in China, Apple has been able to leverage its strong brand and innovative technology to remain competitive in the market. If the localization of Apple Intelligence can be successfully promoted, Apple will further strengthen its leadership position in the Chinese market in the coming years.
The Future of the Supercycle: Technological Innovation and Market Demand
Although the iPhone 16 series may not immediately set off a wave of "replacement waves", with the gradual launch of Apple Intelligence, Apple is expected to usher in a super cycle that will last for many years and cover multiple product lines. This cycle will not only be a hardware upgrade, but also a cycle of deep integration of software, AI, and services. With the gradual popularization of generative AI, the value of iPhone, iPad, Mac and other devices will further increase, and consumer demand for Apple products will enter a stage of continuous growth.
Analysts generally believe that although Apple may face the challenge of weak market growth in the short term, Apple's long-term competitiveness will undoubtedly be further strengthened with its layout in the field of AI and services. If the full potential of Apple Intelligence can be unleashed, Apple is not only expected to break the current technology bottleneck, but also further solidify its leadership position in the high-end smartphone market on a global scale.
Conclusion: Apple's strategic layout and future outlook
Overall, although the iPhone 16 series did not bring revolutionary changes, Apple's strategic layout is still expected. By integrating generative AI technology, strengthening its services business, and deepening its presence in major markets around the world, Apple is laying a solid foundation for the years ahead.
