The new Siri will trigger a wave of device upgrades—has the market underestimated Apple?

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Apple’s AI feature upgrades have sparked two sharply opposing interpretations on Wall Street—while its stock price declined, analysts’ bullish target prices appeared simultaneously, reflecting a deep market divide regarding the tech giant’s AI strategy value.

After the WWDC keynote on Tuesday, Apple’s stock price fell by over 3%, reversing its earlier rally to an all-time high. However, Morgan Stanley analyst Erik Woodring raised Apple’s target price in a report released the same day, from $330 to $360, maintaining an Overweight rating. This implies about a 20% upside from Monday’s closing price of $301.54.

Woodring’s key judgment: the market’s negative reaction is missing a massive opportunity. He believes the new AI-driven Siri will trigger a large-scale hardware upgrade cycle, while also driving early monetization of the services business. He expects the new Apple Intelligence features could drive services business growth of over 10% by 2027, and product revenue to achieve mid double-digit growth.

1.3 Billion Old iPhones: The Core Driver of the Upgrade Cycle

Morgan Stanley’s research reveals the scale of this upgrade cycle: there are currently 1.3 billion iPhones in circulation lacking sufficient hardware specs to run the upgraded Siri, with about 850 million unable to support Apple Intelligence at all.

The core bottleneck is RAM. According to Woodring, the new AI-driven Siri, when processing advanced queries, requires at least 12GB of unified memory. This hardware threshold excludes a large number of existing devices, creating a clear upgrade gap.

Woodring wrote, “With reduced backward compatibility and clearer usage scenarios, we see WWDC overall as a positive signal.” This means Apple’s update is not just a software iteration, but an ecosystem overhaul predicated on hardware upgrades, creating a more direct upgrade incentive.

New Siri Capabilities: Much More Than a Voice Assistant

The upgraded Siri has evolved from a traditional voice assistant to an AI assistant with deep contextual understanding. The new Siri can comprehend device-level scenarios and general world knowledge, offering functions similar to chatbots—it can find files, draft messages, and answer queries.

Additionally, Siri has gained visual intelligence, allowing it to recognize on-screen content and real-world surroundings, further extending interactive dimensions.

Woodring believes this leap in capability transforms Siri from “nice to have” into a “core reason to upgrade,” while also building Apple’s higher hardware integration moat in the AI assistant space.

Beyond Siri, Apple’s Image Playground and image editing features also received high praise from Woodring. In his report, he wrote these functions are “clear ‘killer apps’ and a qualitative leap over previous versions.”

Users can now generate images with natural language, and use the “Clean Up” tool and spatial reconstruction features to edit photos after the fact, even salvaging shots taken at less-than-perfect moments. Woodring wrote in the report:

“We are especially impressed by the photo editing tools, which we anticipate will see very frequent use—this presents Apple’s clearest near-term service monetization opportunity.”

Due to computing resource constraints, these features’ usage on current iPhones will be limited in frequency, forcing users to upgrade their iCloud storage and potentially prompting Apple to launch new iCloud plans and pricing.

Woodring expects related changes to be rolled out as soon as this fall, opening up a strong new monetization path for Apple.

Despite the analyst’s positive outlook, Apple’s stock price still declined in the immediate aftermath of WWDC. This divergence reflects market realities: full rollout of AI features and realization of an upgrade wave will still require time to verify.

Analysts believe the current disagreement is essentially a matter of timing—short-term markets are focused on “underwhelming” features, whereas Morgan Stanley’s logic focuses on realizing results by 2027. Woodring’s $360 target price is premised on the dual drivers of hardware upgrades and services growth in a medium- to long-term narrative.

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