Apple unveiled its AI-enhanced iPhone 16 on Monday — but Wall Street is divided on whether it will be able to reverse a sales slump for the tech giants flagship product.  

Dubbed Apple Intelligence, the firms AI push was front and center during the high-profile presentation at its Cupertino, Calif., headquarters. The latest model features an A18 chip designed to power large generative models and a customizable action button that can be paired with various tasks, such as voice translation, and a new dedicated camera control button.

However, the first AI software features wont be available in beta for iPhone users until next month more than a week after the phone hits stores on Sept. 20. More updates, including an overhaul of the Siri voice assistant and Apples collaboration with ChatGPT, are reportedly expected to follow early next year.

“The next generation of iPhone has been designed for Apple Intelligence from the ground up, CEO Tim Cook said during the companys presentation. It marks the beginning of an exciting new era.

The base iPhone 16 is priced at $799, while the iPhone 16 Plus is slightly more expensive at $899. The more powerful iPhone 16 Pro and Pro Max models start at $999 and $1,119. The phones are available for preorder on Friday and hit shelves on Sept. 20.

Apple is banking on AI to drive a fresh round of phone upgrades. The company posted a whopping 10% drop in year-over-year iPhone sales in second-quarter results reported last May the worst decline since the COVID-19 pandemic triggered a global economic slowdown.

The much-hyped AI features include enhanced writing tools that can rewrite or proofread posts, auto-generate email summaries and the ability to create emojis and other animated images through written prompts.

Stiff competition from smartphone rivals in China has led Apple to rely on phone discounts for some models in a scramble to boost demand. Ironically, Apple Intelligence wont initially be made available in China or the European Union due to regulatory concerns.

Apple shares sank about 1% in midday trading Monday after the event wrapped.

To win over customers, Apple will need to convince the public that AI features on their smartphones are more than just a fad, according to Mark Vena, CEO and principal analyst at SmartTech Research.

Consumers may be still somewhat resistant due to the privacy and confidentiality hurdles that need to be overcome to fully take advantage of the AI benefits in the new iPhones, but I sense that because Apple has historic brand trust with consumers, the momentum will quickly build, said Vena.

The iPhone 16s AI enhancements could help drive more interest to the new lineup, but the delay in some of the features could mean more people wait until they see the features as well, said Ben Bajarin, CEO and principal analyst at Creative Strategies.

I do think the jury is out as to whether this iPhone cycle can drive a stronger-than-usual cycle, Bajarin added. But I think there is good reason to believe the aging base, along with very aggressive carrier promotions, should see a good portion of their base to upgrade given a huge portion of the base is on 3.5+ yr old phones.

Wedbush analyst Dan Ives, a prominent Apple bull, said in a note that initial supply chain checks for the iPhone 16 suggest sales are much stronger than they were for last years model.

He estimated initial shipments could exceed 90 million units higher than Wall Streets expectations of 80 to 84 million.

We are continuing to see further indications across the Asia supply chain that this iPhone upgrade cycle could be a historical one setting the stage for a super-cycle as currently we estimate roughly 300 million iPhones globally have not upgraded in over 4 years, Ives said in a note to clients.

Ives rated the stock as an outperform and set a $285 per share price target.

Aside from the new iPhone models, the company announced updated versions of the Apple Watch and AirPods.

The Apple Series 10 Watch costs $399 and was billed as the thinnest-ever version of the device, with a larger screen and new features including sleep apnea detection. A premium edition, the Apple Watch Ultra 2, costs $799.

The AirPods 4, which are designed to be more comfortable to wear than past versions, start at $129. A version with active noise cancellation capabilities costs $179.