Citi (C, Financials) analyst Atif Malik emphasized that Apple Inc.’s (AAPL, Financials) recent iOS 18.2 update was in line with expectations, noting how the company’s artificial intelligence capabilities are evolving become. Malik maintained his “Buy” rating on Apple shares with a target of $255, while citing optimism about the staggered deployment of Apple intelligence capabilities. With most of the major improvements still to come, the analyst said this approach differentiates the iPhone 16 and 17 refresh cycles from previous models.

Malik also forecast sales of 227 million, 246 million and 253 million units for fiscal 2024, 2025 and 2026, respectively, painting a positive picture of Apple’s iPhone sales. Artificial intelligence is expected to increase consumer demand and the competitiveness of Apple’s premium smartphones.

With iOS 18.2, Apple’s latest operating system, the artificial intelligence approach shows a significant change. The update brings new features powered by OpenAI’s ChatGPT, including Siri integration for expanded voice command capabilities.

The release of iOS 18.2 includes many improvements to increase efficiency and creativity. Programs include Genmoji, which allows users to create personalized emoticons, and Image Playground, which converts word descriptions into images. The Photos app also has improved search functionality and a “Cleanup” option to remove unwanted items.

Six more countries – Canada, Australia, the United Kingdom, etc. – have adopted Apple Intelligence, the company’s proprietary artificial intelligence tool. Future improvements should reflect Apple’s continued commitment to global markets and improve language support.

In collaboration with Broadcom, Apple is developing an in-house server CPU called “Baltra” that is supposed to surpass iOS 18.2 in terms of artificial intelligence. The chip is expected to be mass-produced by 2026 to reduce dependence on Nvidia’s (NVDA, Financials) technology.

This article first appeared on GuruFocus.