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Shares of Apple (AAPL) are under pressure amid reports of weak iPhone 16 demand. First-weekend preorder sales for the iPhone 16 series are estimated to be about 13% lower than the iPhone 15. Maxim Group managing director and senior consumer internet analyst Tom Forte joins Market Domination to discuss the news and whether Apple will see a significant upgrade cycle.

"I think the challenge for Apple, as reflected in those reports, is that they're trying to get a consumer to buy new hardware, which is coming out in the month of September. But the best-selling point for that hardware, especially for consumers in the US — Apple Intelligence, the AI-related features — those aren't coming out until beta next month," Forte tells Yahoo Finance.

"And then it's more challenging for sales in Europe and China, where the AI-related features are coming next year, perhaps later. So I think that I'm not surprised that you're seeing a slow start for the 16 lineup on this gap between the hardware and the software."

He argues that the iPhone 16 will have an upgrade cycle for AI, but it will likely be half the size of the upgrade cycle for 5G. While millions of consumers have iPhones that are at least three years old, Forte notes that a lot of the hardware updates, like processor speed and camera improvements, haven't "necessarily pushed the needle on an incremental amount of consumers upgrading their Apple device."

He believes that the AI upgrade cycle will "take time," and adds, "it isn't helping the company that there's this gap between the hardware and the software." However, he does see consumer interest in AI-enabled smartphones.

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This post was written by Melanie Riehl