Morgan Stanley: Apple seeing stronger Apple Intelligence adoption than initially expected

Apple Intelligence on iPhone, Mac, and iPad.
Apple is gaining traction with its AI features, per Morgan Stanley’s AlphaWise survey. U.S. adoption of Apple Intelligence exceeds expectations, with users not just trying but embracing the technology, signaling stronger-than-anticipated enthusiasm. According to the investment firm’s latest AlphaWise survey, Apple Intelligence adoption came in “better-than-expected,” and there is better perception of its capabilities and consumers indicated a willingness to pay, analyst Erik Woodring wrote in a note to clients.
Chris Ciaccia for Seeking Alpha:
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“[O]ur March ’25 AlphaWise survey of 3,300 US consumers highlights stronger-than-expected consumer perception for Apple Intelligence, record-high US iPhone upgrade rates, and strong interest in new iPhone form factors,” Woodring wrote.
“As a result, when we take a step back and think beyond this period of tariff uncertainty, we believe that Apple’s software and hardware advances — if properly executed upon — should help to accelerate device replacement cycles and create incremental Services revenue opportunities, underpinning our Overweight rating,” Woodring added.
Delving a bit deeper, Woodring said nearly 80% of all eligible U.S. iPhone owners have downloaded and engaged with Apple Intelligence over the past six months. Many have described it as easy to use, innovative or something that improves their user experience. As such, nearly 42% of respondents said it’s extremely or very important for their next iPhone to have Apple Intelligence; and 54% of respondents who are likely to upgrade in the next 12 months said it’s extremely or very important for their next iPhone to have Apple Intelligence.
The survey also showed that on average, U.S. consumers would pay up to $9.11 per month for unlimited Apple Intelligence access, up 11% from the September 2024 survey.
“While we don’t expect Apple to put Apple Intelligence behind a paywall until the platform is more built out, the potential long-term monetization of an Apple Intelligence subscription could reach tens of billions of dollars annually when considering a 1.4B global iPhone installed base, 32% (and growing) of US iPhone owners have an Apple Intelligence supported iPhone, and users are willing to pay up to $9.11/month for Apple Intelligence (which does not appear to be reflected in Street models),” Woodring posited.

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MacDailyNews Note: Morgan Stanley rates Apple stock as “Overweight,” with a $220 price target.
A Morgan Stanley overweight rating means the investment bank believes a stock will outperform its sector or the broader market over a specific period. It suggests the stock is undervalued or has strong growth potential, recommending investors allocate a higher-than-average portfolio weight to it compared to its benchmark index or peers. Morgan Stanley expects Apple stock to perform better than other tech stocks or the market average, encouraging investors to buy or hold more shares relative to a neutral or underweight rating.

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