12:34 PM EDT, 06/11/2024 (MT Newswires) -- Apple's ( AAPL ) move to introduce new artificial intelligence-enabled features for its devices via Apple Intelligence is expected to accelerate device replacement cycles for the iPhone maker, Morgan Stanley said in a report Tuesday.

Apple Intelligence "strongly positions Apple ( AAPL ) with the most differentiated consumer digital agent," the firm said.

Apple Intelligence is the company's new personal intelligence system for iPhone, iPad and Mac, powered by in-house developed large language models.

"We believe Apple Intelligence integrated with [OpenAI's] GPT-4o functionality -- which will be limited to devices with the A17 Pro or M-series chips, or just 8% of the current iPhone and iPad installed base -- will deliver much improved, and unique-to-the-Apple ( AAPL )-ecosystem utility value for Apple's ( AAPL ) 1.3 plus billion users that can accelerate device replacement cycles and drive a return to growth starting in [fiscal 2025]," Morgan Stanley said.

The firm said its base-case iPhone shipment forecasts of 227 million units in fiscal 2025 and 238 million units in fiscal 2026 could prove to be too conservative if Apple Intelligence functionality expands to new languages and third party applications within the next 12 months.

"Overall, while Apple Intelligence/Siri/GPT-4o integration will still need to deliver when first available on devices this fall, we believe the building blocks are in place for a return to growth and more sustained outperformance, supporting our [overweight] rating," Morgan Stanley said.

Morgan Stanley maintained its overweight rating on the company's shares and its $216 price target and "$270 bull case valuation."

Shares of Apple ( AAPL ) were up nearly 6% at $204.25 in recent Tuesday trading.

Price: 204.18, Change: +11.06, Percent Change: +5.73