Apple Inc. (AAPL.US) delayed the release of Siri AI upgrade, causing Citigroup to lower its iPhone sales growth expectations.

The much-anticipated artificial intelligence upgrade for Apple Inc.'s (AAPL.US) Siri has been put on hold, and Citigroup is lowering its sales forecast for the company's iPhones in 2025. Citigroup analysts led by Atif Malik now predict that Apple Inc. will sell 232 million iPhones in the calendar year 2025, a 2% increase from the previous year, but lower than the earlier estimate of 5%. This lower expectation is due to Apple Inc. delaying the promised artificial intelligence upgrade for Siri last week, stating that it is expected to be released within the "next year." Although Apple Inc. did not provide a specific timeline, it was previously expected that the company would release a new and improved voice assistant during the iOS 18.4 software update expected in April or May. Analysts had previously stated that if a more powerful Siri with "screen awareness, personal context, and deep app integration" was released in the spring, it could be a driving force for iPhone sales this year. Apple Inc. had announced that the new version of Siri would be able to use user personal information to answer questions and perform tasks across various applications. Citigroup is not excited about Apple Inc.'s delay in launching and has even removed Apple Inc. from its watchlist of positive catalysts. Malik warned that without the push of artificial intelligence, Apple Inc. may find it difficult to drive iPhone upgrades, especially since the iPhone is still the company's largest revenue source. Malik wrote, "Given the delayed highly anticipated Siri major update, we believe Apple Inc. will miss out on the opportunity to accelerate the (user) upgrade cycle this year." However, Citigroup still maintains a "buy" rating on Apple Inc. stock, with a target price of $275, unchanged from the widely held target price of $255 compiled by Visible Alpha. This means Apple Inc. stock is expected to rise by 20%. So far this year, Apple Inc. stock has fallen by 9%. They noted that part of the reason is "progress in launching Apple Inc. smartphones in China," as Apple Inc. smartphones have not yet been launched in China. The new iPhones with Apple Inc. intelligent featured as DRIVE are expected to perform better in the market that offers the service. The iPhone accounts for the largest share of Apple Inc.'s revenue. According to FactSet data, iPhone sales at Apple Inc. decreased by 4.4% in the 2024 fiscal year ending in September compared to the previous fiscal year. As of the time of writing, Apple Inc. is trading down 0.88% in after-hours trading at $225.48.