Topline
Apple’s annual product launch Monday failed to immediately capture the hearts of investors, as shares of the world’s biggest company slumped during the event largely focusing on previously rolled-out artificial intelligence features coming to iPhones.
Apple CEO Tim Cook delivers remarks before the start of the Apple event Monday.
Key Facts
The event, dubbed “Glowtime” by Apple, marked the official debut of the company’s iPhone 16 line designed to support the integration of generative AI directly into the smartphone’s operating system, and Apple CEO Tim Cook kicked off the prerecorded video by declaring the company is “thrilled to introduce the first iPhones designed from the ground up” for AI.
Among the new non-AI iPhone 16 features include a new customizable camera control tool, and the company emphasized privacy in its Apple Intelligence initiative, a major talking point ahead of the generative AI push.
Apple Intelligence features will hit the U.S. in October as part of a free software update but won’t be ready for Chinese and Spanish languages until next year, a perhaps unwelcome update for those looking for a global rush for new iPhones beginning in 2024.
Shares of Apple fell 1% as the event turned its attention to the iPhone 16 about an hour after its 1 p.m. EDT start, building on a slight dip in earlier trading and moving against a more than 1% gain for the tech-heavy Nasdaq Composite stock index.
Apple also rolled out its Apple Watch Series 10, which starts at $399 and has the thinnest-ever interface for the smartwatch line and a sleep apnea detector, and new AirPods models equipped with USB-C charging cables and designed to integrate with Apple’s AI initiatives, including a system in which users can nod or shake their heads to answer or reject phone calls.
Surprising Fact
Apple stock historically underperforms the broader market on the day of the annual September iPhone launches – the stock underperformed the S&P 500 by an average of 0.6 percentage percentage points on the 2013 to 2023 launches, according to Morgan Stanley analyst Erik Woodring, and the stock has fallen on 12 of the 17 prior iPhone launches, according to Bloomberg.
Crucial Quote
The iPhone 16 “marks the beginning of a new era,” said Cook.
What Did Wall Street Expect From The Event?
AI was expected to “play a starring role” Monday, predicted the Morgan Stanley group, identifying three potential tailwinds from the event for Apple stock: Pricing for the iPhone 16, better batteries for the devices and more AI-associated processing power in the new devices. Bank of America analyst Wamsi Mohan similarly identified price increases and more advanced AI features as drivers for the stock to outperform prior launch dates. JPMorgan analyst Samik Chatterjee said other potential bullish signals would be a release of the newest iPhone operating system, iOS 18, by the first half of October, and teasing AI partners beyond OpenAI and its ChatGPT chatbot to give consumers “further reason for a device upgrade.”
Big Number
14%. That’s how much Apple stock is up since the company’s June Worldwide Developers Conference, trouncing the S&P 500’s 2% gain during the period thanks in large part to investor optimism for a major iPhone upgrade cycle tied to the AI features.
Key Background
Apple is by far the largest company in the world by market capitalization, worth about $3.3 trillion Monday. Significant expectations are riding on the iPhone 16, as the company is fresh off of its weakest quarterly revenue for iPhone sales since 2021. More than half of Apple’s revenues come from iPhones. Among the features of the “Apple Intelligence” update are generative writing prompts, customized emoji icons and an enhanced Siri voice assistant. Prior to Monday’s event, Bloomberg reported Apple intended to announce higher-end iPhone 16s including silicon chips designed to support AI and a new camera button, a new series of Apple Watches equipped with a sleep apnea detection feature and two new lines of AirPod headphones.
