Analyzing the Latest iPhone Cycle

Investing.com — Rosenblatt analysts are adopting a cautious stance regarding the current iPhone cycle, referencing data from recent earnings reports from Verizon (NYSE:VZ), AT&T (NYSE:T), and T-Mobile.

The data reveals a trend of declining smartphone upgrades across U.S. carriers, indicating “muted and declining smartphone upgrades in 3Q24.” This raises concerns about the presence of an AI-driven supercycle.

Key Findings from Q3 2024:

• AT&T: Postpaid phone upgrade rate fell to 3.5%, down from 3.9% the previous year.
• Verizon: Upgrade rate declined to 3.0% from 3.4%.
• T-Mobile: Slight decrease from 2.7% to 2.6%.

Despite these declines, subscriber growth is meeting or exceeding expectations, particularly for T-Mobile, which performed better than anticipated.

Analysts note that although some expected a surge in demand, the conclusion is clear: “there is not a super cycle yet. But that’s OK.”

Future Projections:

Rosenblatt forecasts modest iPhone revenue growth of 3% for the September quarter and 4% in three out of four quarters in fiscal 2025. A more substantial “super cycle” is expected to begin in fiscal 2027 with the iPhone 17, fueled by advancements in Apple’s AI technology.

Apple's upcoming AI features are anticipated to play a major role, starting with iOS 18.1 on October 28, followed by iOS 18.2. These updates will include ChatGPT integration, Visual Intelligence, and new imaging capabilities like Genmoji.

Although early signs suggest a slower growth trajectory, Rosenblatt remains positive about Apple's future. With improved shipment times nearing iPhone 15 levels, the analysts observed a muted start to this cycle, but expect an AI-driven sales boost in the year ahead, which may be reflected in the stock price.