Apple sell-off ‘way overdone’ amid strategic AI delays, analysts believe  

Apple Inc (NASDAQ:AAPL, ETR:APC) shares have been under pressure due to AI development delays but analysts at Wedbush believe these challenges do not undermine the iPhone-maker’s long-term growth potential.

Analysts see the delay of Apple’s AI enhancements, including the next-generation Siri, from the iPhone 16 to the iPhone 17 as a strategic move to ensure the technology is fully developed before release.

“Clearly Apple has more wood to chop around its Apple Intelligence vision and officially coming to market with its Siri revamp now set for iPhone 17,” they wrote. “You get one chance to do this right and Apple/[CEO Tim] Cook needs perfection before it goes live.”

They see the worst-case scenario for the AI delays taking 10 million iPhones from 2025 to 2026.

They continue to expect iPhone sales of 225 million to 230 million in 2025, growing to between 245 million to 250 million in 2026.

“While we get the disappointment from investors and this was not an ideal rollout for Apple Intelligence, we believe this sell-off is way overdone,” they wrote.

They continue to believe that 20% of the world’s population will access AI through an Apple device in the coming years.

“This will spur a major upgrade cycle that will define the future of Apple as the consumer AI highway will run through [Apple headquarters] Cupertino and more AI apps get built on the App Store by developers over the coming six to nine months,” Wedbush wrote.

Investors missing important dynamics

Analysts believe critics of Apple, who have missed its recent $1 trillion-plus market capitalization increase, have overlooked key dynamics in the company's story. 

A key factor driving their outlook is Apple's installed base of over 2 billion iOS devices, including 1.5 billion iPhones, with roughly 300 million units due for an upgrade.

The analysts also believe that as Apple Intelligence expands across devices and new AI-driven apps emerge, the company will unlock significant revenue potential.

The AI services market linked to Apple's ecosystem is projected to generate $10 billion annually by 2027.

Apple's expected partnership with Alibaba to support Apple Intelligence in China is seen as another important step in driving future growth, with a potential launch anticipated around June.

Wedbush repeated its ‘Outperform’ rating on Apple and awarded it a price target of $325. Apple shares traded hands at $211 on Friday.

“In a nutshell, this is not the time to sell this tech stalwart as in our view the next stage of product and AI-driven services growth is still ahead and speaks to our view Apple will make new time highs in 2025 despite the brutal sell-off to start the year,” they wrote.