Top line
Apple’s annual product launch on Monday failed to immediately win investors’ hearts, as shares of the world’s largest company plunged during the event, with much of the focus being on previously introduced artificial intelligence features that will be available on iPhones.
Apple CEO Tim Cook gives a speech before the Apple event begins on Monday.
Key data
The event, dubbed “Glowtime” by Apple, marked the official debut of the company’s iPhone 16 lineup, which is designed to support the integration of generative AI directly into the smartphone’s operating system, and Apple CEO Tim Cook opened the recorded video by saying the company was “excited to introduce the first iPhones designed from the ground up for AI.”
New features on the non-AI iPhone 16 include a new, customizable camera control tool. The company has also emphasized privacy in its Apple Intelligence initiative, a key talking point ahead of the Generative AI initiative.
The Apple Intelligence features will be available in the U.S. in October as part of a free software update, but won’t be available for Chinese and Spanish languages until next year – a potentially unwelcome update for those anticipating a global rush for new iPhones starting in 2024.
Apple shares fell 1% as the event’s attention turned to the iPhone 16 about an hour after it began at 1 p.m. EDT. That built on a slight decline in earlier trading and moved against a rise of over 1% in the tech-heavy Nasdaq Composite stock index.
Apple also launched the Apple Watch Series 10, which starts at $399 and features the thinnest user interface ever in this smartwatch lineup, as well as a sleep apnea detector. There are also new AirPods models with USB-C charging cables that integrate with Apple’s AI initiatives, including a system where users can nod or shake their heads to accept or decline calls.
Surprising fact
On iPhone launch days in September, Apple stock historically lags the overall market — the stock lagged the S&P 500 by an average of 0.6 percentage points for launches between 2013 and 2023, according to Morgan Stanley analyst Erik Woodring, and the stock has fallen for 12 of the previous 17 iPhone launches, according to Bloomberg.
Key quote
The iPhone 16 “marks the beginning of a new era,” Cook said.
What did Wall Street expect from the event?
AI is expected to “play a major role” on Monday, Morgan Stanley Group predicted, identifying three potential tailwinds from the event for Apple stock: iPhone 16 pricing, better batteries for the devices and more AI-related processing power in the new devices. Bank of America analyst Wamsi Mohan also identified price increases and more advanced AI features as drivers for the stock to perform better than previous launch dates. JPMorgan analyst Samik Chatterjee said other potential bullish signals would include a release of the latest iPhone operating system, iOS 18, by the first half of October and the announcement of AI partners beyond OpenAI and its ChatGPT chatbot to give consumers “another reason to upgrade their devices.”
Large number
14%. That’s how much Apple’s share price has risen since the Worldwide Developers Conference in June, far outperforming the S&P 500’s 2% gain during that period. The rise is largely due to investor optimism that there will be a major upgrade cycle for the iPhone tied to AI features.
Important background
Apple is by far the largest company in the world by market capitalization and was worth around $3.3 trillion as of Monday. Big expectations are riding on the iPhone 16 as the company is coming off its weakest quarterly iPhone sales since 2021. More than half of Apple’s revenue comes from iPhones. Features in the “Apple Intelligence” update include generative writing prompts, customized emoji icons and an improved Siri voice assistant. Ahead of Monday’s event, Bloomberg reported that Apple intends to announce higher-end iPhone 16s that include silicon chips to support AI and a new camera button, a new series of Apple Watches with a sleep apnea detection feature and two new lines of AirPod headphones.
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