Dan Ives： iPhone 16 Will Ignite an “AI Super Cycle” and

Tune in to hear how an AI Super Cycle is set to supercharge Apple’s sales!

Apple is on the verge of what Dan Ives, Managing Director at Wedbush Securities, calls an “AI-driven super cycle.” This bold prediction comes on the heels of Apple’s latest iPhone 16 launch, where Ives sees not just strong demand but the beginnings of a transformative period in the company’s growth, primarily driven by artificial intelligence (AI). In an interview on CNBC’s Squawk on the Street, Ives detailed his views on the iPhone 16’s impact, AI’s role in Apple’s future, and why this could be a record-breaking year for the tech giant.

Ives wasted no time addressing the early success of iPhone 16 sales, noting that demand is already outpacing the iPhone 15 by 8 to 10 million units. “Everything we’ve seen so far shows iPhone 16 is about 8 to 10 million units ahead of iPhone 15,” Ives explained. “That lines up with everything we saw in Asia over the last few weeks.” He emphasized that the growing demand is no fluke, citing a “massive pent-up upgrade cycle” with around 300 million iPhones that haven’t been upgraded in over four years.

This pent-up demand, according to Ives, is a critical factor driving the iPhone 16’s early success. “What you’re starting to see is just the reason this is going to be what I believe is an AI-driven super cycle,” he said. “300 million iPhones have not upgraded in four-plus years.” With such a large chunk of Apple’s install base overdue for a new device, Ives expects sales to accelerate even further, particularly as AI features begin to roll out.

One of the central themes of Ives’ outlook is Apple’s increasing focus on artificial intelligence. He pointed out that AI, integrated through the iPhone and other Apple devices, will be key in driving what he calls a “renaissance of growth” for the company. “Apple Intelligence will start to get rolled out, with a lot of the features coming into the holiday season and post-holiday season,” Ives remarked. “That really is going to be what we think 20% of consumers worldwide will ultimately access through an Apple device.”

The emphasis on AI comes as Apple aims to catch up to its competitors, who have already made significant strides in this space. “If you really think about it, Apple was late to the game when it came to AI,” Ives admitted. “You had OpenAI partnerships, ChatGPT, and other partnerships coming along, but it comes down to that install base and the way they’re doing these upgrades.” He believes that AI will play a pivotal role in enhancing Apple’s ecosystem, which already includes 2.2 billion iOS devices. “It’s about that install base, and I think it’s them further monetizing it.”

Although the iPhone 16 is already generating significant buzz, some have criticized the device for not offering enough memory to fully capitalize on AI capabilities. Ives acknowledged this concern but noted that Apple’s approach has always been iterative. “For iPhone 17, they will have to step that up,” he said, hinting that future models will likely offer more advanced AI tools and greater memory to support them.

Looking ahead, Ives believes the integration of AI will accelerate with each iPhone iteration. “Apple is starting to change with the times, and I ultimately believe Google and others are going to have to integrate into iPhone 16 to keep up,” he added. While some have suggested that Apple’s slower start in AI might leave it vulnerable to competitors like OpenAI, Ives remains confident that Apple’s massive install base will be its ace in the hole.

Apple’s ability to manage supply chains and inventory has also been a topic of conversation, particularly with iPhone 16 availability seeming more widespread than expected. Ives was quick to dispel concerns that this indicated weak demand. “They’ve added about 10 to 12 million more units this year compared to a year ago,” he explained. “Now, when you look at preorders, there’s some noise about them being down, but I disagree because you had essentially 10 to 12 million more units available.”

This preparation aligns with what Ives has seen in Asia, where he conducted extensive channel checks. “Everything we’re seeing in Asia shows high single-digit, if not double-digit, unit growth for iPhone 16,” he shared. If these trends hold, Ives predicts that Apple could sell over 240 million units in a single year, a historical record for the company.

In terms of how investors are viewing this sales cycle, Ives believes the focus is shifting from hardware alone to what Apple can offer in terms of services and AI-driven experiences. “Investors are looking through this to see what incremental services revenue could be and what AI means to Apple’s long-term growth,” he said, estimating that AI could add $30 to $40 per share to Apple’s stock price.

Despite the excitement surrounding Apple’s AI integration, Ives is aware of the challenges ahead, particularly from potential competitive threats. Over the weekend, reports surfaced that former Apple designer Jony Ive is collaborating with OpenAI’s Sam Altman on a new computing device, powered by generative AI. While Ives acknowledged that this could pose a long-term challenge, he remains confident in Apple’s ability to leverage its existing strengths. “Look, they have to be concerned about broader trends,” he said. “But when you have what Cupertino has—2.2 billion iOS devices—that’s the key ingredient to their success.”

Ives believes that Apple’s extensive install base provides a unique opportunity for the company to monetize AI features on a massive scale, something no competitor can easily replicate. “If we said a year ago that Apple would have a partnership with OpenAI, no way, that’s not Apple,” Ives noted. “But look what they did. They are starting to change with the times.”

As Apple continues to roll out its AI features across devices and prepares for future iPhone models, Ives is steadfast in his belief that the company is entering a new era of growth. “This is just the start of what I believe is an AI-driven super cycle,” he reiterated. With demand for iPhone 16 already outpacing expectations and the company preparing to leverage AI in new ways, Ives’ bullish outlook on Apple remains as strong as ever.

In conclusion, Dan Ives’ predictions signal that Apple’s iPhone 16 launch is more than just another iteration in its product line. It represents the dawn of a new AI era for the company, one that could propel Apple to new heights in terms of both device sales and services revenue. If Ives is right, the tech giant may be on the verge of a super cycle that could define its growth for years to come.