Apple has 18 months to sort out Apple Intelligence
Investment firm TD Cowen believes Apple has until the end of 2026 to make Apple Intelligence compelling, and in the meantime will see moderate earnings growth plus the launch of folding devices.
Apple needs to make Apple Intelligence more compelling.
A year after it raised its Apple target price on Apple Intelligence and increasing China sales, TD Cowen now sees the same factors taking longer to improve. But it maintains its most recent target price of $275 and recommends that investors buy shares.
In a pair of notes to investors seen by AppleInsider, the company's analysts have been commenting ahead of Apple's next earnings call on July 31, 2025. This is the first quarterly earnings report since the full impact of Trump's ever-changing tariffs policy has been in effect.
According to TD Cowen, Apple had more iPhones manufactured as part of its work to mitigate against the tariffs. The analysts presume that there will be a continued build up of inventory into the next quarter as Apple prepares for the expected semiconductor tariff, which TD Cowen estimates will be 25%.
But this is all about bringing orders forward rather than increasing them. So the company believes that the latest June 2025 quarter will have seen 48 million iPhones manufactured, instead of its predicted 43 million.
Taken across the whole 2025, though, TD Cowen believes that iPhone shipments have continued to be broadly seasonal. It sees the September quarter showing 54 million iPhones instead of the predicted 50 million, but 2025 as a whole to stay as expected on 223 million in total.
That figure is a rise of 4% year over year -- compared to a decline of 3% in the calendar year before -- rather than a significant rise. That's specifically because of declining sales in China, but also because of what the firm describes as an incomplete AI strategy.
TD Cowen notes that Google is now expected to launch its Pixel 10 on August 20 with AI features that it presumes Apple will need to match. These AI issues will continue into the next two quarters, the company estimates, with no particular uplift to the current iPhone 16 or forthcoming iPhone 17 range coming from Apple Intelligence.
Nonetheless, TD Cowen does believe that Apple has 18 months to make Apple Intelligence a compelling feature. Before that period is up, the analysts expect that Apple will launch at least one folding device.
iPhone Fold and perhaps iPad Fold are coming
According to TD Cowen, an iPhone 18 Fold will be released in September 2026, and Apple is expecting to sell between 7 million and 10 million of them. The company agrees with previous reports that the iPhone Fold will have a single hinge, but believes that the screen size has not yet been decided.
Despite recent rumors, TD Cowen believes an iPad Fold is still coming
TD Cowen also disagrees with the most recent reports saying that Apple has abandoned its plans for an iPad Fold. While not going so far as to say there definitely will be one, the analysts are nonetheless saying that Apple is estimating sales of an iPad Fold to be between 5 million and 6 million.
Apple earnings and shares to the end of 2026
In the shorter term, the analysts report that Apple is believed to be aiming to produce over 50 million iPhones in India -- but that currently it looks more like it will achieve only 40 million. That information is said to come from TD Cowen's supply chain contacts, which say that overall Apple's iPhone orders remain stable.
Similar sources say that at the same time, Samsung has been increasing its orders. And both Xiaomi and Oppo have been reducing theirs because of lower than expected demand.
For the rest of Apple's range, the analysts predict that Apple will report that its iPad, Mac, and wearables will be down low single digits for the June quarter. But it will then rise by mid-single digits for the September quarter.
TD Cowen says that tighter consumer budgets are affecting most device sales. It also cites a high price and a lack of consumer use cases for Apple making 60,000 of the Apple Vision Pro instead of 350,000 of them over the same period in 2024.
Services will continue to play a strong part in Apple's overall earnings, though, with growth predicted to be more than 11% for the current quarter. The analysts predict that growth will continue around that figure to the end of 2025.
So none of Apple's various revenue streams are expected to dramatically improve in the foreseeable future, yet overall TD Cowen is optimistic about it. That fits with the similar predictions from both JP Morgan and, before it, Morgan Stanley.
Read on AppleInsider
Comments
Remember the saying: "Fool me once, shame on you. Fool me twice, shame on me."
It has been nearly a year and I have no compelling need to turn on Apple AI on ANY of my many Apple devices. (I do not have any other AI operational either).
The "guessing" trickle improvement to 12 from 8 GB of iPhone memory tells me that 16 is the necessary target as that is where all of the Macs are now. But Apple wants to squeeze out another sales gimmick to have an incentive to buy the 17 series and then the 18 series. A camera update does not compell me to blow around $2,000 for the top model 17 series (what with Apple Care and sales tax). The iPhone could be two generations behind the other brands by the time the 18 series are announced.
Siri still is usable for a count down timer and to dial a phone number but not much else after all these years. Siri is as stale as a piece of 2024 bread bought when the iPhone 16 series came out.
Good Luck Apple. But luck is no substitute for capability or competence in debugging all of the Apple OS versions.
Or what?
The folding iPad picture for this article is not good. That seam setup looks really lousy. Typing on glass for longer periods really sucks compared to a physical MacBook keyboard. However, the click-click-click of a physical keyboard is really boring to listen to, especially the typers who hit the keys harder.
“Or the internet trolls will explode” would be my preference.
So if Apple is taking some time to figure out how to make Apple Intelligence into something actually useful, and not just a me-too version of the LLM AI crap that the rest of the industry has foisted on the world, then that's just fine.
they have a foundation that they can now adapt to whatever comes and makes it possible for smaller startups to target various markets big and small in a way that drives hardware sales.