Apple's stock has recently experienced significant fluctuations, with a valuation drop of over $116 billion following concerns about demand for the iPhone 16 series. Shares fell by 3.3% after analyst Ming-Chi Kuo reported that first-weekend pre-orders for the iPhone 16 were at 37 million units, marking a 12.7% decline compared to last year's iPhone 15 launch. A key factor contributing to this downturn is the unavailability of Apple Intelligence AI at the time of the iPhone 16's launch, which had been anticipated as a major selling point. Apple CEO Tim Cook has indicated that the AI feature will be available in the US soon, with a rollout planned for the UK in December and Europe in 2025. Meanwhile, JPMorgan analyst Samik Chatterjee has noted a slowdown in orders for the Pro models of the iPhone 16, further complicating the outlook for Apple. In contrast, Morgan Stanley analysts have recently upgraded Apple stock to their Top Pick, citing expectations of a record upgrade cycle driven by the integration of Apple Intelligence into its devices. They project that Apple will ship 235 million iPhones in fiscal year 2025 and 262 million in fiscal year 2026, which are 2-12% above consensus estimates. The analysts emphasize that only 15% of Apple’s current device base can support AI features, indicating a substantial opportunity for upgrades as users transition to devices equipped with the A17 Pro or M-series chips. Morgan Stanley's report highlights that Apple is entering fiscal year 2025 with the largest iPhone upgradeable base in history, estimating that 31% of the 700 million upgradeable iPhones will be replaced within the next 12 months. This projected upgrade cycle is expected to drive significant shipment numbers, with upgrade rates in the US anticipated to reach a record 36% in fiscal year 2025. Globally, the iPhone replacement cycle is expected to accelerate further in fiscal year 2026, fueled by broader language support for Apple Intelligence and new hardware features. Morgan Stanley has set a new price target of $273 for Apple stock, suggesting an upside potential of more than 18% from current levels. [4676e936] [79f36b9a]