Apple's annual developer conference on Monday underwhelmed on the artificial intelligence front, and new survey data from UBS showed softening demand for iPhones. On a broader note, UBS highlighted a cooling period has arrived in overall interest in purchasing smartphones, with the U.S. market seeing the sharpest pullback.

According to UBS Evidence Lab's 2Q25 survey of 7,500 consumers across five countries (US/UK/Germany/Japan/China), the 12-month forward smartphone purchase intent fell from 36% in 2Q25 from 39% in 4Q24, flat YoY. The U.S. experienced the sharpest decline, sliding to 37% from 50% in 4Q24 and 44% in 2Q24. 

"Of particular note was a sharp decline in 12M forward purchasing intents in the US to 37% (from 50%/44% in 4Q24/2Q24)," UBS analyst David Vogt wrote in the note, attributing the drop to front-loaded demand ahead of potential new U.S. tariffs.

The 12-month forward purchase intent share for iPhones fell to 14% from 18% in 4Q24, with the U.S. showing a significant drop to 17% from 24%. Samsung's purchase intent remained stable at around 9%. 

The aspirational replacement cycle, or the expected or intended time that consumers plan to wait before replacing their current smartphone with a new one, lengthened to 31.1 months (2.59 years), up from 29.7 months in 4Q24, indicating slower replacement rates, particularly in the U.S. 

"Among the respondents that indicated they are likely to purchase a device within the next 12M, 82% of indicated they would be willing to accommodate some sort of price hike should smartphone OEMs decide to raise ASPs to offset pressures to BoM cost from tariffs," Vogt noted. 

On the Generative AI front, the much-hyped upgrade supercycle that Wall Street analysts forecasted last fall with the launch of AI-enabled iPhones has largely failed to materialize.

Interest in Generative AI-enabled smartphones rose to 19% from 16% in 4Q24), with China showing the most enthusiasm at 78%. Japan was the only region with negative net interest, while the U.S. had only 8%. 

Only 34% of respondents would pull forward purchases or pay extra for AI features... 

Overall, UBS forecasts modest year-over-year growth in smartphone unit sales of around 1% in 2025, followed by flat growth in 2026. 

"We believe investors expect little growth, if any, in smartphone units over the next few years," Vogt emphasized. 

Not the great news for Apple...