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Apple Intelligence Fails to Spark Upgrade Cycle, But Five New iPhones Are on the Way

Apple’s AI features haven’t moved the needle on iPhone upgrades, but the company is plotting at least five new models—including its first foldable—to reignite demand. Shares rose 3.51% on the news.

OurAlpha

02 Jul 2026 — 4 min read

Apple Intelligence hasn’t sparked an upgrade cycle, but five new iPhone models—including a foldable—are in the pipeline.

Wall Street analysts say Apple’s (AAPL) Apple Intelligence features haven’t meaningfully moved the needle on iPhone upgrades, but the company is plotting at least five new models to counter the headwinds. As of 2:30 PM ET on July 2, shares were trading at $304.72, up 3.51% from the prior close.

Analysts skeptical: Per Reuters, analysts believe Apple Intelligence hasn’t effectively driven iPhone upgrade activity, with consumers showing limited interest in AI features.
Five new models: Nikkei Asia reports Apple plans to launch at least five new iPhones between the second half of 2026 and the first half of 2027, with an initial foldable production target of roughly 10 million units.
Memory margin squeeze: 24/7 Wall St. notes Micron’s (MU) 84.9% gross margin dwarfs Apple’s 46.9%, and Micron has locked in roughly $100 billion in long-term customer agreements, putting further pressure on Apple’s hardware margins.
Supply-chain chess: Yahoo Finance reports Apple is in talks with blacklisted Chinese chipmakers to ease AI-driven memory supply tightness.
Security updates accelerated: Reuters and iTnews report Apple is pushing out software security updates early to counter threats from AI-accelerated hacking tools, breaking from its usual practice of bundling patches into major system releases.
Modem dependency: Leaked info via Wccftech suggests the iPhone 18 Pro may still ship with both Qualcomm’s (QCOM) Snapdragon 5G modem and Apple’s in-house C2 modem, hinting the latter may lack mmWave support.

Despite high hopes for Apple’s (AAPL) Apple Intelligence features, Wall Street analysts now argue they haven’t meaningfully spurred an iPhone upgrade cycle. In response, Apple is getting more aggressive on hardware, planning at least five new models and making its first big push into foldables. As of 2:30 PM ET on July 2, shares were trading at $304.72, up 3.51% from the prior close of $294.38, with an intraday high of $305.11 and a low of $293.68.^[^{Yahoo Finance}^]

Apple Intelligence Fails to Spark Upgrades

Per Reuters, analysts say Apple’s AI features haven’t become the upgrade driver many expected.^[^Reuters^] That contrasts with earlier market hopes for a “super cycle” fueled by AI. While CEO Tim Cook recently touted “extraordinary demand” for the iPhone 17 lineup on the earnings call, analysts believe consumer interest and willingness to pay for AI features may fall short.^[^{24/7 Wall St.}^]

Apple’s AI push also faces security challenges. Reuters and iTnews report Apple will release a series of software security updates early to counter new threats from AI-accelerated hacking tools.^[^Reuters^][^iTnews^] The move marks a shift from Apple’s long-standing practice of bundling security patches into major iOS releases. The company says it wants to shorten the window between a fix being published and reaching users’ phones, even though there’s no evidence the patched vulnerabilities have been exploited.

Five New Models and Foldable Ambitions

With AI failing to ignite upgrades, Apple is turning to a broader product lineup to stimulate demand. Nikkei Asia reports Apple plans to launch at least five new iPhone models between the second half of 2026 and the first half of 2027, with an initial foldable production target of roughly 10 million units.^[^{Nikkei Asia}^] The move is aimed at grabbing market share amid a global component supply crunch. Industry sources note Apple has stronger bargaining power than many rivals when it comes to securing smartphone chips and components.

But Apple’s in-house chip journey still faces hurdles. Per Wccftech, leaked information suggests the highly anticipated iPhone 18 Pro series may still ship with both Qualcomm’s Snapdragon 5G modem and Apple’s own C2 modem.^[^Wccftech^] The leak indicates the C2 version may target markets that don’t require mmWave support, while U.S. models would continue using Qualcomm modems—suggesting Apple’s in-house modem isn’t fully mature on key specs.

Supply-Chain Chess Under Memory Cost Pressure

Apple is facing heavy cost pressure from upstream suppliers. 24/7 Wall St. notes Micron (MU) posted an 84.9% non-GAAP gross margin in its latest quarter, versus Apple’s 46.9%.^[^{24/7 Wall St.}^] Micron CEO Sanjay Mehrotra revealed the company has signed 16 strategic customer agreements covering roughly 20% of its DRAM and one-third of its NAND output, with total contract value around $100 billion. Those deals set gross margin floors “well above previous cycle peaks,” leaving downstream buyers like Apple with almost no room to negotiate on memory pricing.

To counter this, Yahoo Finance reports Apple is in talks with blacklisted Chinese chipmakers.^[^{Yahoo Finance}^] The move is seen as Apple trying to diversify supply sources to cut costs amid AI-driven memory tightness—though it carries geopolitical risk.

Analyst Views and Market Reaction

Wall Street is split on Apple. Some analysts doubt Apple Intelligence will drive upgrades, while others point to Apple’s massive services business and strong cash flow (recently backed by a new $100 billion buyback authorization) as key valuation supports.^[^{24/7 Wall St.}^] 24/7 Wall St. analyst Alex Sirois argues Micron is “structurally advantaged” in the current supply cycle, and its roughly 7x forward P/E may not fully reflect its cash flow potential.

Apple shares rose 3.51% in today’s session, reflecting the market’s mixed read on these developments. The stock closed at $294.38 on July 1. Today’s gain may partly reflect optimism around the new-model pipeline, but analyst skepticism on AI-driven upgrades and supply-chain cost pressures remain overhangs.