Apple made a significant leap with the launch of the iPhone 16, equipped with artificial intelligence technologies, a move that UBS analysts see as long-term support for the AI sector and an increase in competitiveness. According to UBS, Apple’s entry into this field through its dedicated AI services reflects the ongoing structural support for the AI trend, as well as the growing competition in the sector. While the product launch may not have had a noticeable impact on Apple’s stock at the moment, analysts believe this step signals increasing growth and capital expenditures related to AI among major tech companies.
UBS reported that the significant spending on AI will continue, especially as companies like Apple increase their investments in AI-powered devices and services. The firm expects that major tech companies’ spending on AI will grow by 47% this year, reaching $218 billion, and will rise by another 16.5% in 2025 to $254 billion.
The A18 chip in the iPhone 16, specifically designed to support generative AI, represents Apple’s latest attempt to enhance AI capabilities while maintaining user privacy. UBS notes that this is part of a broader trend, with demand for AI-related computing expected to grow significantly.
UBS also points out that new AI models may require up to 10-20 times more processing capabilities compared to current models, necessitating increased investment in graphics processing units (GPUs) and other AI infrastructure.
Regarding the sector’s fundamentals, UBS remains optimistic, indicating that recent price declines were driven by broader economic pressures rather than a weakening of AI fundamentals. The firm also expects major tech companies’ earnings to grow by 15-20% in the coming quarters, driven by increased AI revenue generation, with free cash flows projected to rise from $413 billion this year to $522 billion by 2025.
