Apple Will Make Billions From AI in These 2 Ways. Is It Time to Buy the Stock?

Apple (NASDAQ: AAPL) unveiled its much-anticipated Siri update at its recent Worldwide Developers Conference, and it's a big deal for the company.

The new Siri AI, as Apple is calling it, can remember your past conversations, search through users' photos, messages, and email, and understand what you're looking at on your screen. It also offers a more conversational interface (like ChatGPT).

Investors had a mixed reaction to the news: Apple shares climbed on the day of the launch, then dropped again the next day.

But despite the market's uncertainty, there are two important ways Apple is setting itself up to make billions of dollars from Siri AI. And this upgrade may be important enough to justify investors picking up some Apple stock right now.

Image source: Getty Images.

A new iPhone upgrade supercycle is likely on the way

The first way Apple will likely make billions of dollars from Siri AI is by only making the new features available for more recent models -- the ones that already support its previous Apple Intelligence tools. Those start with the iPhone 15 Pro, iPhone 15 Pro Max, as well as all iPhone 16s and 17s, the iPhone Air, and upcoming models.

Because iPhone models from before 2023 won't be compatible with the new Siri AI, many people may take this as their cue to upgrade. This is a long-standing play that Apple runs from its playbook, and it typically works well.

Some analysts expect Apple's improved artificial intelligence offerings to create a supercycle that eventually tips the scales for a large fraction of the current 1.5 billion iPhone users worldwide to buy the latest models. Apple generated more than $209 billion in iPhone sales in fiscal 2025, so fractionally more users than average upgrading their devices over the next several years could bring in tens of billions of dollars in additional sales.

Siri AI could cause services revenue to surge

Apple is giving away most of its AI tools to its users for free, but it will set daily usage limits on some of their most advanced capabilities, such as image generation. This is typical in the AI services space, and it's creating a new revenue opportunity for Apple.

If users want to push their daily usage higher, they'll need to have an iCloud+ subscription. The company has said "most subscriptions" will include expanded Siri AI usage, which likely means users who want it will have to spring for something beyond the lowest iCloud+ tier, which costs just $1 per month. This could be the first step toward Apple transitioning iCloud from primarily a data-storage service to more of an AI service add-on.

And it could eventually be a very lucrative move. Wedbush analyst Dan Ives believes AI services could eventually add $15 billion to $20 billion annually to Apple's services revenue. That's an especially notable prediction considering that Apple's services revenue was $31 billion in its most recent quarter.

Why owning Apple could still be a smart move

I've criticized Apple in the past for fumbling its initial forays into AI. But I've also come to believe that, overall, the company is making strategic moves in artificial intelligence that could benefit it for years to come.

Apple typically takes a slow-and-steady approach to new services and technologies, and it's sticking to that tried-and-true strategy here. If an iPhone upgrade supercycle kicks in over the next few years because users want to get their hands on Siri AI, then sales of Apple's cash cow product will surge.

What's more, I think Apple is still just beginning to determine how best to benefit from its AI services offerings. I wouldn't be surprised to see iCloud+ evolve in the next couple of years to include even more AI services and different tiers.

I believe Apple occupies a unique position in the tech space right now because of its hardware dominance. While many of Apple's peers are racing to create the best AI model and spending hundreds of billions of dollars on data centers, Apple continues to benefit from selling devices with high profit margins.

All of the above is enough to convince me to continue holding onto my Apple shares. If you don't own Apple stock right now, I think opening a position could be a smart move, though I wouldn't expect the types of phenomenal gains that some AI-first companies are experiencing. Rather, buy Apple if you're looking for a more steady approach to the current AI landscape.

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.