Can Upcoming AI iPhone Take Apple to New Heights?

Moomoo News Global joined discussion · Sep 3 16:32

$Apple (AAPL.US)$ CEO Tim Cook, alongside his team, is set to unveil the iPhone 16 set on September 9 in Cupertino. This launch is anticipated to mark Apple's inaugural venture into generative AI technology. Analysts from Wedbush predict that this event will trigger the most significant upgrade cycle in Apple's history, citing that with AI now on the doorstep, the potential for innovation is immense.

Our recent Asia checks are giving us more confidence this upgrade cycle will unleash a long-awaited renaissance of growth for Cupertino over the next year.

Apple Stock Gain After WWDC

From June 10 to 14, Apple hosted its annual Worldwide Developers Conference (WWDC) and unveiled a series of generative AI capabilities for the iPhone. The launch included the first set of tools under "Apple Intelligence," featuring personalized Genmoji—Apple's AI-generated emoji—and an enhanced Siri capable of responding to inquiries about your schedule, the contents of your emails, and the arrival time of a loved one's flight.

Since the event, Apple's stock has risen by 18.72%, contrasting with declines seen in other tech giants. Over the same period, $NVIDIA (NVDA.US)$ fell by 1.98%, $Microsoft (MSFT.US)$ by 1.41%, $Alphabet-C (GOOG.US)$ by 6.05%, and $Amazon (AMZN.US)$ by 3.15%, while only $Meta Platforms (META.US)$ saw an increase of 3.83%. Analysts from Morgan Stanley lauded Apple's innovative AI features, forecasting an acceleration in iPhone upgrade cycles and ongoing growth for the company.

Following a WWDC that delivered on the key details we were focused on heading into the event, we have even greater conviction that Apple is on the cusp of a multi-year product refresh that underpins our OW rating, $216 price target, and $270 bull case valuation.

In addition, Apple disclosed its third-quarter financial results in August, revealing that overall revenue growth surpassed Wall Street expectations, enhancing market confidence in the company's future prospects. The company experienced a return to top-line growth, with sales rising in all regions except Greater China.

What History Says About Apple Stock After Launch Days?

Historical data indicates that Apple's stock price generally falls by an average of 0.66% on the day an iPhone is announced, often driven by critiques of the new model's lack of innovation. For instance, the release of the iPhone XR was met with criticism for being merely a budget version of an iPhone, leading to diminished enthusiasm among Apple enthusiasts.

However, following the announcement, the stock has shown an average increase of 2.79% over the next 60 trading days, with gains generally accelerating thereafter. Specifically, within 60 days post-launch, the stock has risen in 10 out of 14 instances, with the highest surge reaching 20%. This uptick can be attributed to the continued high demand for the new iPhone, despite any critical reviews.

Hence, historical patterns suggest that investors who carefully analyze the market following an iPhone release and make their moves within 60 days stand a good chance of success. By purchasing Apple stock before November, there is a 70% likelihood of achieving gains. Additionally, maintaining ownership through December and January aligns with traditional U.S. sales peaks, potentially enhancing the upward trajectory of consumer stocks like Apple.

Can Upcoming AI iPhone Take Apple to New Heights?

Wall Street Bullish on Apple

Apple's total market valuation currently stands at a staggering $3.48 trillion, firmly holding the title of world's highest market cap public company. Citi has ranked Apple as its top choice for AI-related stocks before 2025, surpassing competitors like Nvidia and $Arista Networks (ANET.US)$.

Morgan Stanley also places Apple among its highest conviction stocks. Analyst Erik Woodring has returned with a series of predictions regarding Apple’s forthcoming iPhone release. He believes the market is more ready for upgrades now than it was during the initial sales surge seen with the first 5G iPhone.

We do see the potential for Apple to perform better than historical seasonality into year-end as the introduction of the iPhone 16 and Apple Intelligence helps to unlock pent-up demand.

Wedbush analyst Dan Ives emphasized Apple's significant ongoing upgrade cycle, which is anticipated to propel revenue growth in 2025 and 2026. "Some might interpret the sell-off as a lack of confidence, but Apple recently posted strong quarterly results and is poised for an AI-driven super cycle. We believe now is not the time to exit," Ives commented.

However, Warren Buffett's Berkshire Hathaway significantly reduced its Apple investment by 49.9% in the second quarter. Analysts interpret this move as a strategy for risk management rather than a reflection of skepticism about Apple's long-term potential.

"Buffett's reduction of his Apple stake is merely about risk management," explained Joe Gilbert, senior portfolio manager at Integrity Asset Management. "If there were any concerns about the longer-term viability of Apple, Buffett would have exited the entire position. Similar to Berkshire's other stock position reductions, Buffett has meaningful unrealized gains."

Source: CNN, Barrons’

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