Apple Readies for AI Upgrade with New iPhones

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As the smartphone industry battles tariffs and cost-conscious consumers, Apple’s new slate of iPhones figures to be a big hit.

Updated mobile software, computer chips and exterior design add up to the biggest iPhone upgrade in years. The new hardware will even catch the attention of those clinging to old models. “Apple’s 2025 product strategy is simple: Increase upgrade rates and shorten replacement cycles,” writes tech market research firm IDC in a note.

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The superslim, $1,000 iPhone Air will win over many fans. The redesign is a precursor to Apple’s future foldable phone, set to launch as early as next year. Other models are the standard iPhone 17 (starting at $800) and the Pro and Pro Max (starting at $1,100 and $1,200). There are reports that early demand is very strong.

Apple has stumbled trying to launch useful artificial intelligence features, lagging competitors, such as Alphabet, Microsoft and Meta, when it comes to AI tools. The refreshed phone lineup sets Apple up for success down the road, with upgraded mobile chips that are specially designed for AI tasks right on the device.

“In designing its own chips, Apple is able to customize its specific devices for performance, power efficiency, and available features,” writes William Kerwin, an analyst at Morningstar, in a research note. “Its A-series chips for the iPhone integrate neural engines for AI capabilities like facial recognition and are optimized for power efficiency to deliver best-in-class battery life.”

Advanced hardware and a massive customer base make the iPhone a go-to device for developers creating AI apps. And as Apple catches up with AI, its deliberative approach could pay off by staying focused on privacy and security, plus everyday AI features that work well for most people.

One AI feature that Apple recently highlighted is real-time language translation with its AirPods earbuds. Apple Intelligence can also describe an image on the iPhone screen or in the camera lens, whether it’s a plant, a piece of clothing, a painting or anything in between.

Look for a big AI upgrade next year, when Apple plans a major revamp of its Siri voice assistant. The company may even partner with Google to use its Gemini AI model.

In the long term, the iPhone is expected to see solid growth in a mature smartphone market. Analysts at Morningstar expect 5% yearly growth for iPhone revenue through 2029. Admittedly, though, that is below the 10-year historical growth rate of 7%.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers AI, technology, telecom and education, but will jump on other business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited email newsletters.

He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.