Apple has historically been a harbinger of innovation and investor optimism in the huge industry of tech. Though recent volatility and a mixed macro environment suggests otherwise, Citi analysts are focused on reiterating a Buy rating in a note issued on Tuesday. Their optimism is fueled mostly by Apple’s increasing software strength, including its most recent unveiling at the 2025 Worldwide Developers Conference (WWDC), which highlighted a significant transformation in the business’s user interface and artificial intelligence advantages.

Software Revival, Apple’s Integrated Design

Citi analysts cite what they call “a major revamp of its software designs across Apple platforms, new operating systems, and Apple Intelligence updates” as the major growth driver through 2026. At the center of the change is the “Liquid Glass” design language, a clean, contemporary UI refresh that now brings the appearance and feel onto a single page for iOS, iPadOS, and MacOS. Citi said,

“It liked the new and more unified Liquid Glass design across all platforms, along with continued improvement on Vision Pro, the more Mac-like iPadOS and more iPhone apps on MacOS for continuity.”

This design revival indicates Apple’s renewed emphasis on a smooth user experience, a factor that tends to foster tighter ecosystem loyalty and hardware demand.

Although it’s not all about looks. Apple Intelligence, Apple’s own collection of on-device AI technologies, has been integrated into the heart of applications that have amazed analysts. From productivity aids on the Mac to artistic innovation on the iPhone, this AI is built to work deeply and naturally, smartening up devices without ever compromising privacy.

Citi observes that the next Siri update, though postponed to 2026, has already created buzz. The assistant’s expected personalized AI features might further set Apple apart in the cutthroat AI battle spearheaded by Microsoft, Google, and Amazon.

Vision Pro & Ecosystem Endurance

The Citi report also makes reference to continuing momentum for Apple’s spatial computing headset Vision Pro. Though still in the early days of adoption, the changes Apple has been making (incremental software updates and enhancements to the ecosystem) are now positioning the device into something beyond a novelty. The Vision Pro is becoming more integrated into Apple’s overall platform strategy with every update, particularly through common UI conventions and cross-device continuity.

The intriguing part for Citi is the way macOS is being made more iPhone-friendly. The growing number of iOS apps available on Mac and a more Mac-oriented iPadOS indicate well for a longer-term play of erasing platform boundaries, one that could eventually promote wider use of multiple Apple devices within families and businesses.

Trade Dynamics on a Global Level

Apple is indeed influenced by its software division, but the company’s major precondition in succeeding within its core business is the iPhone. The firm’s unit sales forecast for iPhone remains quite pessimistic, as it anticipates sales of 226 million units in 2025 and 234 million in 2026, and these represent year-over-year growth of -0.6 and +3.2%, respectively.

Additional caution is related to macroeconomic uncertainties, with a particular focus on global tariff issues. Citi is actually projecting a “pull-in” attribute to characterize the June quarter, with global customers taking advantage of the short-lived relief in reciprocal tariffs, especially in light of U.S-China relations. However, they warn that pending decisions under Section 232 could introduce further volatility in the second half of the year. Citi experts

“Some pull-in in the Jun-Q given temporary pause on reciprocal tariffs in China and other countries, and pending Section 232 decisions, with more uncertainties in the 2H.”

Evidence provided by China Academy of Information and Communications Technology (CAICT) says that China’s entire smartphone shipment in April reported a decline of 1.6% year-on-year, while foreign brands, mostly iPhones, showed a growth of 1%. The sales of iPhones in China may get buoyed in the second quarter with the ongoing “aggressive promotions during the 618 shopping festival and likely tariffs-related pull-in,” as well as aggressive promotional activities here.

Apple’s China Conundrum

One of Apple’s most closely monitored territories is still China, where the tech giant has been confronted by increasingly aggressive competition from local players such as Huawei and Xiaomi. Though, Citi says that Apple’s March quarter performance in China was flat on a constant currency basis, a perhaps reassuring sign, it signals China’s slowdown more broadly.

The company attributes Apple’s stability in China to a combination of price promotions, brand loyalty, and a healthy hardware-software ecosystem. However, they also point out that additional geopolitical tensions or tariffs could significantly affect second-half performance in 2025 and beyond.

Citi’s Outlook for Apple Shares in 2026

Despite muted demand forecasts for the near term and geopolitical risks, Citi feels that “Apple is set up well” for 2026, which will be driven by software innovations. The strength of the belief is due to the manner in which Apple strategically goes about the evolution of its platforms. It further strengthens its AI capability and deepens ecosystem lock-in; these are the factors that stand to gain user engagement and eventually, revenue.

Apple’s move toward highly integrated software and device-based AI is not only a strategic shift, it’s an evolution that’s necessary. For a company that used to wow consumers with game-changing hardware, the bar has been moved higher. Competitors are swamping the AI marketplace and device innovation is approaching the limits of the naked eye. Apple’s 2026 configuration, as proposed by Citi, has less to do with pursuing explosive hardware expansion and more to do with increasing users being able to stick to it by tightening up ecosystem unity, privacy-oriented intelligence, and gentle yet meaningful UI enhancement.

The actual game here isn’t iPhones selling out in Shenzhen factories, it’s having the customer purchase one Apple device and five more in the future, and never look back. If Apple can make this happen, even low-key hardware sales could mean outsized financial returns. That’s a wager Wall Street may be more and more ready to make. While investors may still be focusing on iPhone cycles, the bigger picture is that the future Apple may be less about hardware iteration and more about the software transformation.