According to analysts, Apple Intelligence will not increase iPhone sales

Apple ( AAPL ) is expected to introduce its much-touted artificial intelligence features next week, but analysts don’t expect the launch to turbocharge lagging demand for its latest line of iPhones.

Apple Intelligence, as the feature set is known, is the Cupertino, California-based company’s first and long-awaited foray into AI. But a delayed launch and a global slowdown in smartphone sales during the quarter dampened hopes that the iPhone maker could see an increase in upgrades.

The tech giant could add Apple Intelligence to iPhones, specifically iPhone 15 Pro models or later, on October 28 in a software update that will give users the first look at what Apple’s version of AI will be capable of. But analysts at Jefferies ( JEF ) warned in a research note on Sunday that this likely won’t give a boost to iPhone sales.

Read more: Apple is losing to Huawei in China. Here’s why

Jefferies said the updates, which will include limited hardware capabilities and a relatively small AI model, are “not significant enough” to improve iPhone sales.

The research firm expects an incremental rollout of Apple Intelligence features in subsequent software updates over the next six months, with a major increase in AI capabilities on the iPhone likely not on the horizon until 2026

Sales of the new iPhone lineup largely disappointed, growing just 1 percent year-on-year in the current quarter, according to the Jefferies note citing market research data from Counterpoint. This includes the fact that iPhone 16 deliveries started two days earlier than last year.

Overall, global smartphone sales rose just 2% in the quarter, down from 6% growth in the second quarter of the year. Coupled with rising AI-related hardware costs, Jefferies said it expects overall downward pressure on smartphone shipments and sales to continue through the end of this year.

While analysts initially touted the growth opportunities and the potential for an upgrade “supercycle” for Apple, recent research shows that a minority of consumers buy a new iPhone because of the new features. Most only choose to upgrade their smartphones after they become outdated or get stolen or damaged.

The company also hoped that Apple Intelligence would help drive sales. It reported sales of nearly $86 billion for the quarter ended June 29, up 5 percent from a year earlier and beating Wall Street estimates. But the company continues to face growing competition in China, including from smartphone maker Huawei, which has continued to be a drag on its sales.

Apple will release earnings on October 31.

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