Apple’s AI features fail to spark a wave of upgrades; UBS survey shows users’ willingness to upgrade continues to decline.

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Apple's artificial intelligence features (Apple Intelligence) have failed to become the catalyst for the super cycle of device upgrades that Wall Street expected, and this narrative continues to face setbacks.

The latest survey by UBS shows that the proportion of respondents who would upgrade early due to Apple Intelligence features has dropped by about 500 basis points to around 24% compared to six months ago, while the proportion who said these features have "no impact" on their purchase decision has risen by about 300 basis points to roughly 31%. This suggests that the actual driving force of Apple's AI features on consumer upgrade behavior is weakening rather than strengthening.

Nevertheless, there are still some positive signals in the survey: in the U.S. market, 12-month intention to purchase an iPhone has increased approximately 300 basis points year-over-year to around 20%, with even more significant growth seen in the UK and German markets; meanwhile, consumer interest in Apple's foldable screen phone remains relatively strong, considered a potential source of demand support.

UBS maintains a 12-month target price of $296 for Apple, and Apple's stock price has now returned above $300.

Apple Intelligence's impact on upgrade decisions continues to weaken

UBS analyst David Vogt recently cited results from its Evidence Lab's latest survey, noting that Apple Intelligence has yet to ignite the long-awaited super cycle of iPhone upgrades. The survey covers more than 7,500 smartphone users in five major markets.

The results show that about 24% of respondents indicated they would upgrade their devices early because of Apple Intelligence features, down around 500 basis points compared to six months ago; while the proportion who said these features have no impact on their purchase decision rose to about 31%, up roughly 300 basis points from half a year ago.

This data shows a clear gap with previous Wall Street expectations. Previously, several analysts positioned Apple's AI features as the core driver for a new super cycle of iPhone upgrades, supporting optimistic forecasts on Apple's hardware sales. As of now, this logic has not been verified in consumer behavior.

Amid overall weak willingness to upgrade, there is distinct differentiation between different markets.

The survey indicates the U.S. market's 12-month iPhone purchase intent rose about 300 basis points year-over-year to around 20%, with the UK and German markets performing even better, rising about 600 and 400 basis points respectively.

In the Chinese market, 12-month purchase intent dropped about 100 basis points year-over-year to around 15%, with added potential price increase pressure listed by analyst David Vogt as one of the main factors limiting further expansion of Apple's valuation.

Foldable iPhone emerges as a potential demand highlight

With the pulling power of Apple Intelligence features falling short of expectations, the soon-to-be-launched foldable iPhone is seen as another potential driver of demand.

The survey shows that while the overall "net interest" in the foldable phone market has dropped about 600 basis points to minus 8% compared to six months ago, consumer preference premium for Apple-brand foldable products has significantly expanded—Apple's foldable phone's "net interest" lead over regular foldable phones has widened by about 600 basis points to around 48%.

David Vogt notes the market's sentiment toward Apple's foldable products is directionally positive, which helps support iPhone demand, especially with the new AI features launched at Apple's Worldwide Developers Conference (WWDC26) expected not to be a substantial driver of demand.

He estimates the foldable iPhone could contribute up to around 5 million units in initial sales, representing about 2% upside to his current forecast.

Regarding shipment forecasts, David Vogt maintains an estimated iPhone shipment of 261.6 million units for Apple's fiscal year 2026, up about 15.7% year-on-year, mainly benefiting from strong demand for iPhone 17 and some demand being released ahead of expected price increases.

UBS maintains Apple's 12-month target price at $296, based on its calendar year 2027 EPS forecast of $9.86 and a 30x P/E valuation.

David Vogt points out that the current valuation already to some extent reflects the recent expectations for iPhone demand improvement and some AI option value, but uncertainties in the product roadmap and potential price increase risks limit further expansion of the valuation multiple.

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