Apple is Betting on AI-Powered Features for its iPhone to Help Reverse Recent Sales Declines. Here’s a Look at the Current Progress.

Apple is banking on its new Apple Intelligence AI tools to revitalize iPhone sales, which have seen a sluggish period in recent years. CEO Tim Cook announced that these features would “supercharge” the iPhone 16, and initial results show moderate success. In the third quarter, iPhone sales reached $46.2 billion—up over 5.5% from the previous year and slightly above analyst predictions, giving a first look at the iPhone 16’s impact after preorders opened on September 13.

Despite economic headwinds and previous challenges encouraging upgrades, early sales suggest the iPhone 16’s AI enhancements may support a much-needed turnaround. Cook noted that iOS 18.1, which includes Apple Intelligence, has already doubled adoption rates compared to last year’s update, signaling consumer interest. Initial Apple Intelligence tools released last week, like call recording and transcription, only recently became available, with more expected in December through iOS 18.2. Analysts believe this gradual rollout could temper upgrade urgency, yet still drive a strong holiday season, especially with an estimated 300 million iPhones globally overdue for an upgrade.

Apple’s quarterly revenue hit $94.9 billion, up 6% from the prior year, though profits dropped by 35%. Sales in China, a key market, were relatively flat at around $15 billion, missing the expected $16.1 billion due to price cuts aimed at countering intense competition. Analysts like CFRA’s Angelo Zino and Wedbush’s Dan Ives have high hopes for the holiday quarter as a key period, expecting a robust demand cycle bolstered by Apple Intelligence.