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citi believes that the ai ​​industry will shift from the infrastructure stage to the device stage, and apple is expected to shine in the ai ​​device era with "apple intelligence". ai will also be a highlight of apple's new product launch in september. idc predicts that by 2028, more than 70% of smartphones will have generative ai capabilities.

hard ai

author | long yue

editor | hard ai

with the iphone 16 about to be launched, citi believes that apple will replace nvidia and become the "preferred ai stock."

on august 29, citi analysts listed apple's stock as the "top ai stock" for 2025, surpassing nvidia and network equipment maker arista.

citi believes that the launch of the ai ​​ecosystem is divided into three stages: the first stage is chips/servers, the second stage is networks/storage, and the third stage is equipment. citi classifies the first two stages as the "infrastructure stage". the institution believes that the ai ​​industry has entered the infrastructure stage and is about to enter the final stage - the equipment era.

although nvidia is the leader in the ai ​​infrastructure stage, the time for ai technology to shift to device functions seems to have arrived. citi believes that with the launch of "apple intelligence", apple will shine in the era of ai devices.

01

iphone 16 is coming soon

citigroup predicts ai will be a bright spot

at present, apple is about to launch a new product iphone 16, which is scheduled to be officially unveiled at the "it's glowtime" product launch conference on september 9.

citi analysts predict that how the iphone 16 hardware upgrade will better support ai functions will be a highlight of the launch conference. analysts wrote in the research report:

apple’s september product launches usually focus on hardware upgrades, but we believe the company will focus on showing how the hardware updates to the iphone 16 series will better support the apple intelligence feature, which is expected to be officially launched later this fall.

apple intelligence integrates ai big language models into a series of apple devices such as iphone, ipad, mac, etc., which can help users write documents, proofread content, generate images, etc. according to industry insider mark gurman, apple has begun training retail store employees on apple intelligence and plans to use it as a major promotional point for the iphone 16 series.

not only iphone 16, citi believes that next year's iphone 17 will further focus on ai functions as an upgrade. the agency predicts that the shipments of iphone 16/iphone 17 in 2024 and 2025 will be 85 million and 92 million units respectively, and the total shipments will be 228 million and 241 million units respectively.

citi analysts wrote:

before ai phones become available to the mass consumer market, it will take some time for consumers to test all of these new features and truly see how it will improve daily life. we believe apple is best positioned to achieve this goal given its leadership in the high-end smartphone market and its ability to seamlessly integrate software and hardware.

citi analysts said that since 2016, apple's stock performance has outperformed the market by an average of 5%-6% between the june earnings season and the september new product launch. the agency has a buy rating on apple's stock with a target price of $255.

02

ai mobile phone market has huge potential

idc predicts that more than 70% of smartphones will be

will have generative ai capabilities

in citi's view, the ai ​​mobile phone market has great potential. its analysts cited idc data in a research report, saying that the average annual compound growth rate of ai mobile phones will reach 78.4% in the next five years, far exceeding the market average.

in july this year, idc raised its forecast for generative ai smartphone shipments, predicting that it will reach 234 million units in 2024, higher than the 170 million units predicted in february. this will account for nearly 20% of total smartphone shipments, far higher than the 51 million units and 4% market share in 2023.

idc also predicts that from 2023 to 2028, the average annual compound growth rate (cagr) of generative ai mobile phones will reach 78.4%, while the average annual growth rate of the entire smartphone market will be only 2.3%, which means that by 2028, more than 70% of smartphones will have generative ai capabilities.

idc defines the next generation of ai smartphones as having a system-on-chip (soc) that can efficiently run local generative ai models and is equipped with a neural processing unit (npu) with at least 30 trillion operations per second (tops).

citi said that currently, apple's a17 pro (used in the iphone 15 pro), as well as mediatek's dimensity 9300 and qualcomm's snapdragon 8 gen 3, all meet this standard.