Investment firm Wedbush expects iPhone 16 sales to surge due to Apple (NASDAQ:)'s (AAPL) AI advancements.

The analysts' positive outlook is based on “recent component supply checks in Asia” that point to stable demand for iPhones and a potential boost in sales in China, a key market for Apple. Wedbush predicts that the iPhone 16, which is expected to launch in mid-September 2024, will drive this sales boost.

“We believe that following a stronger-than-expected March quarter, there are emerging signs of iPhone sales growth in many markets,” Wedbush reports. This positive outlook is driven by the upcoming iPhone 16, which will feature significant AI improvements. Wedbush sees this as an exceptional opportunity for upgrades due to the backlog of demand for new iPhones.

Wedbush highlights the importance of Apple’s focus on AI, noting that “Apple’s AI breakthrough is imminent” and positioning Apple as a leader in the consumer AI revolution. They predict that developers will be required to integrate their AI systems with Apple’s technology to reach Apple’s vast user base, which includes more than 2.2 billion iOS devices.

AI integration presents a huge economic opportunity for Apple. Wedbush predicts that developers will create “many new generative AI-powered apps” that will use Apple’s technology, resulting in “an annual increase in high-margin services revenue of $10 billion.” They estimate that AI integration will increase Apple’s stock value by “$30 to $40 per share.”

Wedbush concludes by reaffirming his strong confidence in Apple, highlighting five key reasons: achievable iPhone sales targets for 2024, demand for the AI-enabled iPhone 16, sustained growth in high-margin services, the emergence of Apple’s advances in AI, and Apple’s unparalleled number of active devices.

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