Apple Stock Could Surge on Record iPhone Sales and Bold AI Strategy

Like many stocks in 2025, Magnificent Seven constituent Apple (NASDAQ: AAPL) has experienced a volatile year. Shares were down as much as 31% in April, driven by Liberation Day tariff fears. However, as of the Dec. 9 close, the stock has delivered a total return of over 11%.

Over the past three years, Apple stock has nearly doubled. However, sluggish product sales have capped the tech company’s growth. 

Apple’s fiscal year 2025 (FY2025) earnings report, released in September, showed product revenue of $307 billion. That is down around 2.9% versus FY2024.

Readers should note that Apple’s fiscal year reporting period is one quarter ahead of the calendar year period.

Luckily, one of the world’s foremost authorities on smartphone sales thinks Apple just hit a home run.

International Data Corporation (IDC) projects that Apple will see record smartphone shipments in 2025. Below, we will break down IDC's report and recent AI developments at Apple, explaining what they may mean for shares going forward.

IDC Forecasts Record iPhone Shipments and Sales

On Dec. 2, IDC upgraded its global 2025 smartphone shipments forecast. It now sees shipments rising by 1.5%, up from 1% previously. IDC noted “accelerated performance from Apple in the holiday quarter" as a reason for this update. IDC projects a 6.1% year-over-year increase in iPhone shipments for all of 2025, driven by strong iPhone 17 sales.

IDC highlighted its expectations for iPhone sales in China, where the devices held a 20% market share in October and November. IDC says that this was “miles ahead” of competitors and boosted its Chinese Q4 growth expectations for Apple from 9% to 17%. Overall, IDC expects iPhone sales in 2025 to generate record revenue above $261 billion, up 7.2%.

However, the firm expects iPhone shipments to drop by 4.2% in 2026 due to a strategic shift in Apple’s product release cycle. Apple reportedly plans to stagger the launch of iPhone 18 models—some in Fall 2026, others in Spring 2027—aiming to reduce supply chain strain and smooth revenue across the year.

This planned strategy makes IDC’s 2026 sales drop forecast unalarming, as it sees iPhone shipments rising by 5.4% in 2027. This is more than double the 2.4% growth rate IDC forecasts for Android and HarmonyOS smartphone shipments in 2027.

iPhone 17 Expectations Are Already High, But That’s Not the Point

The IDC report may not substantially change Apple’s outlook in the near term. Much of the stock’s recent rally has been due to iPhone 17 bullishness. Thus, the market likely has already baked in high expectations for the iPhone 17 this holiday season. It is certainly possible that Apple could exceed those expectations, especially given IDC’s optimism. This could lead to a strong up move after the company’s next earnings release. However, it is also possible that Apple fails to meet expectations, which may result in a down move.

Either way, if Apple delivers record smartphone revenue, it reinforces the company’s position as a dominant player in consumer electronics. It also signals that Apple has time and space to refine its AI strategy.

Apple Accelerates AI Strategy With Strategic Hires and Partnerships

Apple has been making significant strides to overhaul its AI strategy recently. The company is reportedly nearing a $1 billion per year deal to use Alphabet’s (NASDAQ: GOOGL) Gemini model in powering the next generation of its Siri voice assistant. While substantial, this price tag is reasonable compared to the $416 billion in revenue Apple generated in FY2025.

Apple also recently hired Amar Subramanya as its new Vice President of AI. Notably, he worked at Alphabet for 16 years, eventually serving as the Head of Engineering for the Gemini Assistant. This hire comes as Apple’s former Senior Vice President for Machine Learning and AI Strategy, John Giannandrea, is stepping down.

Given that Apple’s AI strategy has not enthused markets, these moves feel like steps in the right direction. A full-fledged and new AI push could lead to significant long-term upside in shares as the company further monetizes its huge installed base. Overall, the outlook for Apple shares continues to be bullish.

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