How much AI is baking before the September 9th event?

Apple (NASDAQ:AAPL) is set to unveil the much-anticipated iPhone 16 lineup on September 9, 2024, one day ahead of the rumored date. Indeed, the big day will be about Apple Intelligence. More importantly, however, it will be about the new generative AI details we didn’t hear about during the company’s WWDC (Worldwide Developers Conference) 2024 event held in June.

As investors mark their calendars and tune in to next Friday’s presentation, Apple CEO Tim Cook and his team must overcome a high to keep Apple’s stock from sinking. History suggests that AAPL stock will gravitate lower during the event as new products and features struggle to impress in real time versus expectations. Still, the stock may ultimately trend higher in the months and years leading up to the event, even if the upcoming “It’s Glowtime” conference — which refers to iPhone borders that glow around the edges of the screen when the redesigned Siri is summoned — doesn’t reveal nothing that I was not. already waiting

• Apple is sure to be a big mover when it unveils its next iPhone next week.
• Expectations and hopes will be high, but the Cupertino giant can still impress if Siri steals the show.
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Apple Intelligence must be a pioneer

In a previous conference call, Mr. Cook noted that his firm was poised to “break new ground” in generative AI. At this point, it is not yet clear what he meant by breaking new ground.

Was he referring to the plethora of slightly fun AI features (Private Cloud Connect, ChatGPT partnership, AI emojis and ease of use features) presented at the last WWDC? Or is there something really amazing for next week? Undoubtedly, a multimodal Siri demo that matches the intelligence of the deeply impressive ChatGPT-4o demo can be enough to shock and awe in a way that Apple hasn’t done in a presentation since Steve’s death Jobs.

Either way, if there’s a perfect time to break new ground, shock and awe, it’s the September 9th event. And given that Tim Cook isn’t one to over-hype and under-deliver, I’d have to give him the benefit of the doubt as Apple takes the stage next week. The stage is set, and analysts will be all over the event looking for new details to add to their financial models and investment theses. Will they find them? Time will tell.

Is Apple stock too bullish ahead of the September 9 event?

Undoubtedly, there has been quite a bit of AI hype in Apple’s stock price since the 37% rally from the low to the peak began in April. The stock has gone from being an AI-ignorant piece in the Magnificent Seven to one of the most important pieces taking advantage of consumer appetite for AI products. The AI-enabled iPhone 16 Pro may very well be the first big investment everyday consumers make in generative AI.

Of course, a ChatGPT Plus subscription is a modern staple in the age of AI. However, at just $20 per month, it’s not a substantial outlay for consumers. With ChatGPT integrated into Apple Intelligence in iOS 18 (the next major iPhone OS update), questions remain as to whether the value proposition from Apple Intelligence will be substantial enough for users to justify dropping a few grand on a new phone.

In addition to impressive software updates (Siri), Apple needs to sell us its new A-series chip (probably the A18) and describe what its new neural engine can do that non-AI-enabled iPhone chips (A16 and below) can’t i can do .

Apple Intelligence: It’s a clear catalyst, says Morgan Stanley

Indeed, many analysts are citing legacy iPhones and AI-ready hardware as drivers behind a looming device supercycle. Morgan Stanley (NYSE:MS), which had AAPL stock as one of its top picks for July, is among the most prominent Wall Street firms that believe in Apple Intelligence, referring to the technology as a “clear catalyst” for upgrades.

Early signs suggest that the beta release of iOS 18.1, which has some Apple Intelligence features, has nothing “groundbreaking”. That said, Apple has a chance to show the public what it really wants with a Siri update for the LLM era; maybe a full supercycle would be more in the cards than a mini upgrade cycle.

At a relatively steep 34.6 times price-to-earnings (P/E) ratio, there’s some scope for AI hype right here. However, I would argue that a mini supercycle is priced rather than a supercycle, which we may not have seen since lockout. As I see it, Apple gave us some tasty appetizers in WWDC. But whether he’ll serve a main course on September 9 remains the $4 trillion question.

Conclusion of AAPL actions

AAPL stock has historically underperformed during big events. Think of it as buying on the rumor and selling on the news if you will, but Apple shareholders have been on a roll even during their most historic events (think WWDC 2024 and last year’s Vision Pro reveal).

It will be interesting to see how the latest iPhones and iOS 18 fare ABC (NASDAQ:GOOGL) Google’s Pixel 9 Pro device, which released its AI phone weeks before Apple. If the iPhone 16 reveal can blow the Pixel 9 out of the water, there may still be upside for AAPL stock as the chances of a supercycle are higher.

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