Apple's latest push into artificial intelligence may not be the upgrade driver the company hoped for, according to a new survey from UBS. The investment bank's Evidence Lab polled over 7,500 smartphone users and found that while iPhone purchase intent is rising in the US and some European markets, Apple Intelligence—the company's suite of AI features—is having little effect on upgrade plans. What could move the needle? A foldable iPhone.
What the Survey Found
UBS, a global investment banking firm, conducts regular surveys to gauge consumer sentiment around smartphones. The latest data shows that US 12-month iPhone purchase intent rose about three percentage points year-over-year to roughly 20%. Gains were also noted in the UK and Germany, while China saw a softening in interest.
At the same time, the average age of iPhones in use slipped slightly to about 22.9 months, though it remains near the survey's historical highs. That suggests users are holding onto their devices longer than in the past, a trend that has been a concern for Apple investors because it slows the upgrade cycle.
Apple Intelligence: Not a Game Changer Yet
Apple Intelligence, introduced at the company's Worldwide Developers Conference in June, includes features like enhanced Siri capabilities, AI-powered photo editing, and smarter notifications. The idea was to give users a reason to upgrade to newer iPhones that support the technology. But the UBS survey indicates that these AI features are not resonating strongly with consumers as a reason to buy a new phone.
Instead, respondents showed more enthusiasm for the concept of a foldable iPhone. Foldable smartphones, which have been growing in popularity from competitors like Samsung and Motorola, offer a larger screen that folds into a compact form. Apple has not yet released a foldable device, but rumors have persisted for years. The survey suggests that if Apple were to launch one, it could significantly boost upgrade intentions.
What This Means for Investors
For everyday investors, this survey offers a window into consumer behavior that could affect Apple's stock performance. Apple (AAPL) is one of the largest companies in the world by market capitalization, and its revenue heavily depends on iPhone sales. If upgrade cycles remain long, that could pressure sales growth. However, the uptick in purchase intent in key markets like the US and Europe is a positive sign.
The lack of excitement around Apple Intelligence may be a short-term concern, but it doesn't mean the feature is a failure. AI integration in smartphones is still in its early stages, and consumer interest could grow as more applications emerge. Meanwhile, the appetite for a foldable iPhone suggests that Apple's product roadmap could be a major catalyst if the company decides to enter that market.
Investors should also consider the broader economic backdrop. Consumer spending on electronics can be sensitive to interest rates and inflation. In Europe, where European stocks have been flat amid mixed economic signals, the survey's positive data from the UK and Germany is encouraging. Similarly, the US market has shown resilience, with car sales staying flat as affluent buyers offset higher costs, suggesting that consumer confidence remains intact.
China: A Key Concern
The softening of iPhone purchase intent in China is worth watching. China is Apple's third-largest market after the Americas and Europe, and it has been a source of growth in recent years. However, increased competition from local brands like Huawei and Xiaomi, as well as geopolitical tensions, could weigh on Apple's performance there. The UBS survey adds to a narrative that Apple may face headwinds in the region.
What to Watch Next
Investors will be looking for Apple's next product announcements, particularly any hints about a foldable iPhone. The company's earnings reports will also provide more concrete data on iPhone sales and the impact of Apple Intelligence. Additionally, broader market trends and economic data from the US and Europe will influence consumer spending on high-ticket items like smartphones.
For now, the UBS survey suggests that while iPhone demand is ticking up, the real excitement may lie in hardware innovation rather than software features. That could shape Apple's strategy in the months ahead.
