Apple in the second half of 2025: The key battle for the AI revolution and iPhone comeback
⚙️ Core growth engines: AI, iPhone, and services business
AI ecosystem implementation process:
The “Apple Intelligence” system launched by Apple at WWDC 2025 has been deeply integrated into all platforms, including iOS and macOS. Its design emphasizes device-side computing and privacy protection, attempting to differentiate itself from cloud AI giants. While analysts question its ability to drive hardware upgrades in the short term, developer feedback indicates that the new AI toolchain has already attracted over 5,000 apps for testing, with ecosystem potential gradually unfolding.
The Redemption Mission of the iPhone 17:
The delayed launch of the low-cost iPhone in 2026 has weakened 2025 expectations, but the iPhone 17 remains a key bet for the year. This model will debut the full suite of “Apple Intelligence” features, focusing on a revolution in voice assistant interaction and personalized experiences. If actual delivery meets market expectations, it could replicate the iPhone 12's super upgrade cycle and reverse the 6% decline in shipments from the first half of the year.
Service business resilience:
The services segment (including App Store, Apple Music, etc.) continues to serve as Apple's “stabilizer,” accounting for 28% of total revenue with a 12% year-on-year growth rate and a gross margin exceeding 70%. The integration of AI features into subscription services (such as an upgraded Siri+ and personalized content recommendations) may further boost user willingness to pay, providing a safety net for the stock price.
⚠️ Risks and challenges: Balancing innovation pace and cost pressures
Product delays and talent loss:
The delay of product lines like the low-cost iPhone until 2026 exposes supply chain adjustments and R&D efficiency issues. More critically, Meta poaching Apple's AI head with a $200 million salary highlights the intensifying battle for top talent, which could delay the mass production of key AI projects.
Cost pressures eroding profits:
Global supply chain restructuring and component inflation are putting pressure on gross margins. To mitigate risks, Apple is accelerating its “Made in the USA” initiative, collaborating with partners like Corning and Applied Materials to boost domestic production capacity. However, short-term cost increases have already forced the company to reduce its annual share buyback program by $10 billion.
Positioning anxiety in a competitive red ocean:
Despite the launch of AI features, the market believes Apple lacks a “disruptive experience,” particularly lagging behind Google and Microsoft in generative AI applications. Investors are concerned about whether the company can convert technology into premium value that users are willing to pay for, rather than merely using it as a defensive selling point.
📈 Market Expectation Divergence: The Critical Point of Bull-Bear Struggle
Optimists: Valuation Recovery Imminent
Bullish institutions (such as Wedbush) emphasize that current stock prices already reflect pessimistic expectations, while the AI smartphone upgrade cycle and service stickiness are underestimated. If iPhone 17 pre-sales exceed expectations, a target price of $250 is achievable (implicitly implying a 17% increase from current levels).
Cautious camp: Weak growth narrative
Bearish analysts point out that Apple has underperformed the Nasdaq index by over 15% this year, reflecting its loss of leadership in the tech sector. Hedge fund holdings have dropped to a five-year low, indicating capital shifting toward pure AI assets. While technical indicators were boosted by a 5% single-day surge in early August, a break above the $225 threshold is needed to confirm a trend reversal.
Long-term value anchor:
Apple still boasts over $3 trillion in market capitalization and $54 billion in free cash flow. The moat formed by its “user ecosystem closed loop” is unlikely to be disrupted by short-term volatility, but it must demonstrate that AI can translate into actual revenue growth rather than mere conceptual hype.
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💎 Comprehensive Outlook: Awaiting Catalysts to Materialize
Apple's performance in the second half of 2025 will hinge on two key milestones:
iPhone 17 Launch (September): The market will rigorously evaluate the actual AI functionality and pre-order data; any signals exceeding expectations could trigger short covering;
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Holiday Season Earnings Report (late October): Service revenue growth and iPhone gross margin will serve as key evidence of “AI monetization capability.”
⚖️ Short-term volatility is inevitable, but Apple's decisive factor is clear: prove through products that AI is not merely decorative but a compelling reason for users to upgrade. If successful, the current valuation trough could become the starting point for a strong rebound; if unsuccessful, caution is warranted regarding a potential revaluation of value under the “hardware company” label.