Apple shares AAPL fell 0.54% on Monday as a KeyBanc survey pointed to weaker consumer intentions to upgrade their iPhones over the next year, despite stronger initial interest in the iPhone 18 compared with its predecessor.
Around 20% of survey respondents said they had purchased or pre-ordered an iPhone 18, up from 17% for the iPhone 17 a year earlier.
However, only 41% said they were likely to upgrade within the next 12 months, down from 48% in the previous survey.
The findings suggest that higher prices and fewer carrier promotions could weigh on iPhone sales, even as consumers show a preference for Apple’s more expensive models.
KeyBanc maintained its Underweight rating on Apple, citing valuation concerns and the potential for slower growth in iPhone sales and the company’s services business.
Higher prices could weigh on iPhone upgrade demand
KeyBanc analyst Brandon Nispel said consumers were becoming less willing to upgrade as prices rise and existing devices continued to meet their needs.
“Below the surface, the broader base of consumers are less likely to upgrade as prices rise, carriers restrict promotions, and their existing hardware is adequate,” Nispel wrote in a note discussing the survey. “This ultimately leads to a moderation in unit volumes.”
The survey found that 55% of respondents who purchased or pre-ordered an iPhone 18 chose the Pro model, while 45% selected the Pro Max. In the previous year’s survey, the corresponding figures were 37% and 41%.
The shift towards higher-priced models could support Apple’s average selling prices, potentially offsetting some pressure from slower unit growth.
However, KeyBanc expects higher prices and reduced carrier promotions to remain obstacles to broader demand.
Interest in Apple’s anticipated foldable iPhone Duo also appeared stronger than purchase intentions.
While 44% of respondents expressed interest in the device, only 24% said they were likely to buy it within the next 12 months at its $1,999 price.
Apple’s AI features have limited appeal as an upgrade driver
The survey also indicated that Apple’s artificial intelligence capabilities were becoming a less compelling reason for consumers to purchase a new device.
About 33% of respondents said they were likely to upgrade because of AI features, down from 42% in the previous survey.
Meanwhile, 65% said they were unwilling to pay a monthly fee for AI features, compared with 61% a year earlier.
The findings suggest that AI-related improvements may not be enough to persuade a larger share of consumers to replace their existing iPhones, particularly when price remains a concern.
Apple has also faced questions about whether its earnings growth can justify its elevated valuation.
KeyBanc said the stock was trading at around 40 times its 2027 earnings estimate, compared with a three-year average of approximately 27 times.
The brokerage’s Underweight rating reflects its view that valuation risks remain significant as consumer upgrade intentions weaken.
Valuation concerns persist despite Apple’s market strength
Apple had largely avoided the broader technology-sector weakness associated with concerns about AI spending, with its market capitalisation rising above $5 trillion for the first time last week.
However, concerns remain over whether earnings can grow sufficiently to support the share price.
Nispel had assigned Apple a $250 price target, implying a potential decline of 27% from Friday’s closing price.
Not all analysts share that cautious outlook. Melius analyst Ben Reitzes rates Apple a Buy with a $370 price target, arguing that the company’s relatively limited AI capital expenditure distinguishes it from competitors planning substantial investments in the technology.
Reitzes described Apple as “the poster child for how the market is rewarding a capex-lite approach that is AI-model agnostic.”
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