Morgan Stanley's latest survey: Apple Inc.'s (AAPL.US) AI function user penetration rate exceeds expectations, with strong willingness to pay.

Despite some industry experts having a reserved attitude towards Apple Inc.'s artificial intelligence feature "Apple Intelligence", a report released by Morgan Stanley on Tuesday pointed out that the feature has gained high recognition among American consumers. Analyst Erik Woodring wrote in a report to clients that according to the latest AlphaWise research data, the user acceptance of Apple Intelligence is "better than expected", consumers' awareness of its functions has significantly increased, and they have shown a clear willingness to pay for it. Woodring wrote, "Although tariff policies bring a lot of uncertainty, our research in March 2025 of 3,300 American consumers shows: first, consumers' acceptance of Apple Intelligence far exceeds expectations; second, iPhone upgrading rates are at a historic high; and third, consumers have shown a strong interest in the design of new models." Woodring added, "Therefore, when we take a more macro perspective and look beyond the current uncertainties of tariffs, we believe the progress Apple Inc. has made in software and hardwareif properly implementedwill help accelerate device replacement cycles, and bring additional revenue opportunities to the services business. This is also the basis for our recommendation to hold Apple Inc. stock." In addition to the "hold" rating, Woodring gave Apple Inc. a target price of $220. Woodring stated that in the past six months, nearly 80% of eligible American iPhone users have downloaded and used the Apple Intelligence feature. Most users find it easy to use, innovative, and significantly enhances the user experience. Notably, about 42% of respondents said it was extremely or very important for the next generation of iPhones to have Apple Intelligence, and among users planning to upgrade in the next 12 months, this proportion reached 54%. The survey also showed that American consumers are willing to pay an average of $9.11 per month for unlimited use of Apple Intelligence, an 11% increase from research data in September 2024. Woodring believes, "Although Apple Inc. is unlikely to charge for this feature in the short term, considering a global base of 1.4 billion iPhone users, with 32% (and growing) of American iPhone users having iPhones that support Apple Intelligence, and users willing to pay up to $9.11 per month (a situation that does not seem to be reflected in market expectations models), in the long run, the potential annual revenue from Apple Intelligence subscription services could reach billions of dollars." Woodring stated that the survey results also highlight the importance of iPhone design. Since the launch of the iPhone 12 in 2021 and the iPhone X in 2018, Apple Inc. has not made substantial updates in this area. Looking ahead, Woodring is highly confident that Apple Inc. will launch a mid-range slim model in the fall of 2025, and believes the possibility of a high-end foldable screen phone being released in the fall of 2026 is increasing, both of which will help stabilize iPhone growth. Key data shows that 40% of American iPhone users are "very interested" in upgrading to a slim or foldable screen model (30% of users are only interested in slim models, and 24% are only interested in foldable screen models)."