Apple's artificial intelligence features, branded as Apple Intelligence, have not become the catalyst for a major iPhone upgrade super-cycle that Wall Street had anticipated. A new survey from UBS indicates that consumer willingness to upgrade devices early specifically for AI features is continuing to decline, putting renewed pressure on market confidence in Apple's AI-driven growth narrative.
According to a recent report from UBS analyst David Vogt, a survey of over 7,500 smartphone users across five major markets by its Evidence Lab showed that approximately 24% of respondents would upgrade their phone earlier because of Apple Intelligence, a decline of about 500 basis points from the first half of the year. Concurrently, the proportion who said AI features have "no influence" on their purchase decision rose to about 31%, an increase of roughly 300 basis points.
This outcome suggests that Apple's core thesis of using AI features to drive a new wave of hardware upgrade cycles has not yet translated into effective consumer action. It has also led some investors to question the sustainability of further valuation expansion for the company.
Diminishing Upgrade Catalyst from Apple Intelligence
UBS noted that Apple Intelligence has not yet provided a substantial boost to user upgrade behavior, and the previously anticipated "AI-driven replacement cycle" has yet to materialize. Although iPhone purchase intent in the US, UK, and German markets showed relative resilience with year-on-year increases of about 300, 600, and 400 basis points respectively, analyst Vogt believes the AI features unveiled at WWDC26 will remain a difficult near-term catalyst for significant demand.
Against this backdrop of a cooling AI narrative, the prospect of a foldable iPhone has emerged as one of the few positive sentiment drivers. While the overall "net interest" in foldable smartphones declined by about 600 basis points to -8%, consumer preference for a "foldable phone from Apple" was notably stronger, with the relative premium expanding by approximately 600 basis points to around 48%. UBS anticipates that Apple could launch its first foldable iPhone at its annual September event, potentially adding around 5 million units in incremental sales, which would represent an upside of about 2% to its iPhone shipment forecast.
Shipment Growth Meets Valuation Constraints as Apple Awaits New Product Validation
UBS forecasts Apple's FY26 iPhone shipments will reach approximately 261.6 million units, representing year-on-year growth of about 15.7%, primarily driven by stronger demand for the iPhone 17 and potential demand pulled forward by anticipated price increases.
On valuation, UBS maintains its target price of $296 for Apple, based on a 2027 earnings per share estimate of $9.86 and a 30x price-to-earnings multiple. The firm believes the current share price already partially reflects near-term iPhone demand improvement and the option value of AI, but uncertainties in the product roadmap, weakness in the Chinese market, and pricing factors limit the potential for further valuation upside.
According to consensus estimates, Wall Street broadly maintains a positive stance on Apple: 35 analysts rate it a "Buy," 19 a "Hold," and 2 a "Sell," with an average 12-month price target around $319. With Apple shares having recently moved back above $300, and the AI-driven upgrade thesis yet to be realized, market focus is gradually shifting from "technology narrative" to "hardware cycle and product launch cadence."
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