Topline
Apple posted its highest share price this year on Wall Street fanfare over the Silicon Valley titan’s artificial intelligence potential ahead of next week’s Worldwide Developers Conference, as investors eagerly await what some see as the next big event to hit the declining iPhone sales will drive.
Apple CEO Tim Cook
Key facts
Shares of Apple rose as much as 1% to $196.42 in Wednesday trading, posting the highest share price since mid-December and surpassing a $3 trillion market cap for the first time since January (the difference is due to billions of dollars in share buybacks from Apple).
Apple has now officially reversed its 15% decline from January to April as the market sold off Apple shares and bought others seen as more fashionable AI bets.
JPMorgan analyst Samik Chatterjee, who was part of a chorus of analysts hyping Apple’s annual event this week in notes to customers and driving up the stock price, said the conference starting Monday “will highlight whether Apple is successfully outpacing the rest of the industry.” has overtaken. , despite a perceived slowdown in AI investment.”
Chatterjee said he expects the WWDC event to “successfully catalyze an upgrade cycle” for the iPhone, a much-needed tailwind for Apple as iPhone sales are expected to be the weakest since 2020 during the current quarter, according to consensus analyst forecasts prepared by FactSet.
Chatterjee added that he expects the upgrade cycle, in which the estimated 1.5 billion iPhone users will trade in their existing smartphones for the latest model, to begin this year before accelerating in 2025 as macroeconomic conditions are likely to improve and consumers will become hungrier for AI-heavy smartphones. .
The main focus at WWDC will be whether Apple reveals it will be ready to launch generative AI in iPhone-specific applications like Siri and iMessage by September, Chatterjee said.
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Crucial quote
If WWDC has an impact on Apple stock given the AI hype. “Historically, WWDC has not been a material stock catalyst for Apple…we think this year will be different as Apple formally enters the Gen AI race,” Morgan Stanley analysts led by Erik Woodring predicted.
What to pay attention to
If WWDC has an impact on Apple stock given the AI hype. “Historically, WWDC has not been a material stock catalyst for Apple…we think this year will be different as Apple formally enters the Gen AI race,” Morgan Stanley analysts led by Erik Woodring predicted.
Important background
Last year has been an unusually cool period for Apple investors, as the stock’s 7% return is worse than the S&P 500 and rivals Microsoft’s 23% return. Microsoft, which overtook Apple as the world’s most valuable company earlier this year, has translated the intense interest in AI into profit growth more tangibly than Apple, with first-quarter net profit 20% higher than the same period in 2023, much better than Apple’s net growth of -2%. Apple has been fairly quiet in discussing its AI offerings to the public, although CEO Tim Cook said in February that the company has put a “tremendous amount of time and effort” into generative AI. Aside from the turmoil over Apple’s unclear path to monetizing AI, the biggest point of frustration among investors is the decline in its core Chinese operations, with sales in the region expected to be 7% lower than the record high of $74.2 billion by 2022.
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