Apple Intelligence Fails To Ignite "Upgrade Activity," UBS Says

Apple Intelligence is not yet moving the needle or exciting the customer base the way Wall Street had expected when analysts pitched AI as the spark for a new iPhone upgrade supercycle. That narrative continues to sputter.

UBS analysts, citing their latest Evidence Lab survey of more than 7,500 smartphone users across five major markets, found that Apple's AI features are "not driving upgrade activity," with the share of respondents saying they would upgrade sooner for Apple Intelligence falling to about 24%, while those saying it has no impact on their purchase decision rose to about 31%.

Here's an excerpt from David Vogt, the UBS analyst covering Apple and other technology hardware names, who wrote Wednesday that Apple Intelligence has yet to spark the long-awaited iPhone upgrade supercycle:

Apple Intelligence is not driving upgrade activity as total respondents indicating that they would upgrade sooner for Apple Intelligence features declined to ~24% (-500 bps HoH) while those noting no impact on their purchasing decision rose to ~31% (+300 bps HoH).

Beyond the lack of spark behind Apple Intelligence, the survey found that 12-month iPhone purchase intent rose by about 300 bps year-over-year in the US market to about 20%, while in China it fell by about 100 bps to around 15%. The U.K. and Germany posted solid gains, up 600 bps and 400 bps, respectively.

Another bright spot: Interest in an Apple-branded foldable remains strong, even as the broader foldable phone market has cooled.

What Vogt said:

As Apple is expected to launch a foldable iPhone at its annual September event, we highlight interest in both a foldable smartphone and a foldable specifically by Apple. 'Net interest' in a foldable smartphone notably declined ~600 bps HoH to (8)% in aggregate. While 'net interest' in an Apple foldable also declined (-100 bps HoH), we note that the favorability spread of a foldable specifically by Apple over a foldable smartphone widened by ~600 bps HoH to ~48%. We believe that the sentiment towards an Apple foldable is directionally positive for iPhone demand, particularly as AI features recently announced at WWDC26 are unlikely to be a material driver in our view.

Vogt estimates FY26 iPhone units at 261.6 million, up 15.7% year-over-year, helped by stronger iPhone 17 demand and some pull-forward from expected price increases. He noted that a foldable iPhone could add as many as 5 million units initially, or about a 2% upside to his estimates.

The analyst maintained Apple's 12-month price target of $296, based on 30 times its CY27 EPS estimate of $9.86. He said the valuation already reflects stronger near-term iPhone demand and some AI optionality, while concerns over the product roadmap, China weakness, and possible price hikes have stunted some multiple expansion.

According to Bloomberg data, Wall Street analysts are largely bullish on the stock, with 35 "Buy" ratings, 19 "Holds," and 2 "Sells." The average 12-month price target is around $319.

Share are back over the $300 level.

Is Apple Intelligence a dud? 

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