New Siri to Trigger Upgrade Wave: Is the Market Underestimating Apple?

Apple's AI feature upgrades have sparked two diametrically opposed interpretations on Wall Street—falling stock prices coinciding with analysts raising bullish price targets—reflecting deep divergence in the market regarding the strategic value of the tech giant's AI initiatives.

Apple's stock skidded more than 3% on Tuesday following the WWDC keynote, reversing a rally that had previously pushed it to historic highs. However, Morgan Stanley analyst Erik Woodring went against the tide in a research note released the same day, raising Apple's Price Target from $330 to $360 and maintaining an Overweight rating. This implies approximately 20% upside potential compared to Monday's closing price of $301.54.

Woodring's core judgment is that the market's negative reaction is missing a huge opportunity. He believes that the new AI-driven Siri will trigger a large-scale hardware upgrade cycle and accelerate the monetization of the services business. He expects that the new Apple Intelligence features could drive services business growth by over 10% by 2027, with the products business achieving mid-double-digit growth.

1.3 Billion Older iPhones Become the Core Driver of the Upgrade Wave

Morgan Stanley's research reveals the scale basis for this upgrade wave: 1.3 billion iPhones currently in circulation lack sufficient hardware configurations to run the upgraded Siri, with about 850 million units completely unable to support Apple Intelligence.

The core bottleneck is memory. As Woodring pointed out, the AI-driven new Siri requires at least 12GB of unified memory support when processing advanced queries. This hardware threshold directly excludes a large number of existing devices, creating a clear gap in upgrade demand.

Woodring wrote, "With reduced backward compatibility and more clearly defined use cases, we view WWDC as overall a positive signal." This means Apple is not merely iterating software this time, but reconstructing its ecosystem with hardware upgrades as a prerequisite, making the motivation to upgrade more direct.

New Siri Leaps in Capability, Going Beyond a Voice Assistant

The upgraded Siri has evolved from a traditional voice assistant into an AI assistant with deep context understanding capabilities. The new Siri can understand on-device context and general world knowledge, functioning similarly to a chatbot that can locate files, draft messages, and answer queries.

Additionally, Siri has added visual intelligence capabilities, able to recognize screen content and the surrounding environment in the real world, further expanding the dimensions of interaction.

Woodring believes that this leap in capability transforms Siri from a "nice-to-have" feature into a core reason "driving upgrades," establishing higher hardware binding barriers for Apple in the AI assistant race.

Beyond Siri, Apple's Image Playground and image editing features also received high praise from Woodring. He wrote in the research note that these features are "clear 'killer apps,' representing a qualitative leap from previous versions."

Users can now generate images through natural language and perform post-processing repairs on photos using the "Clean Up" tool and spatial reconstruction features, allowing for remediation even if the timing of the shot was slightly off. Woodring wrote in the report:

"We are particularly impressed by the photo editing tools and expect very high usage frequency. This represents the clearest opportunity for Apple's recent services monetization."

Due to computing resource limitations, the use of these features on existing iPhones will be subject to frequency limits. This will force users to upgrade their iCloud storage and may even prompt Apple to introduce new iCloud packages and pricing structures.

Woodring expects that related changes will be implemented as early as this autumn, opening up a powerful new monetization path for Apple.

Despite the positive analyst outlook, Apple's stock price still fell in the immediate aftermath of WWDC. This divergence reflects the market's realistic logic: the full implementation of AI features and the actual realization of the upgrade wave still require time to verify.

Analysis suggests that the current divergence is essentially a difference in time horizons—the short-term market focuses on the "missed expectations" of feature releases, while Morgan Stanley's logic focuses on the earnings realization path leading up to 2027. Woodring's $360 Price Target is built precisely on this medium-to-long-term narrative driven by the dual engines of the upgrade cycle and services growth.

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