Apple's iPhone 16 smartphones will be available on Sept. 20 but customers will have to wait until next month to start using the company's much-ballyhooed Apple Intelligence. And even then, the AI features will be in "beta" or test mode. That news and the slow rollout of AI features were a disappointment to Apple stock watchers.
The consumer electronics giant on Monday introduced its iPhone 16 series smartphones, Apple Watch Series 10 smartwatches and upgraded AirPods wireless earbuds and headphones. It also demonstrated the capabilities of Apple Intelligence, its take on artificial intelligence.
The first set of Apple Intelligence features will be available in beta next month as a software update for newer iPhones, iPads and Mac computers. Apple promised more features rolling out in the months to come.
Also, Apple Intelligence initially will be available only in U.S. English, with additional languages and geographies coming over the course of the next year.
In December, the company plans to bring Apple Intelligence in localized English to Australia, Canada, New Zealand, South Africa and the United Kingdom. In 2025, it will add support for languages such as Chinese, French, Japanese and Spanish.
Apple AI 'Not Quite Ready For Prime Time'
"With lots of words like 'later this year' and 'early next year,' the core Apple message for iPhone 16 was: Next year will be better," Needham analyst Laura Martin said in a client note Tuesday.
She added, "The introduction of 'Apple Intelligence' with a suite of AI-driven features from iOS 18 was not quite ready for prime time."
Still, Martin rates Apple stock as buy with a price target of 260.
UBS analyst David Vogt had a similar take. In a client note, he said Apple's AI is "not a fully baked offering."
Further, Apple's AI seems like me-too offerings compared with what's already available from Alphabet and Meta Platforms, he said.
"While Apple reiterated various AI use cases/features and introduced Visual Intelligence, which allows for AI camera capabilities (pulling up restaurant information), the applications are more evolutionary and provide similar functionality already offered through Google Gemini and Ray Ban Meta smart glasses," Vogt said. He rates Apple stock as neutral with a price target of 236.
Staggered Rollout For Apple Intelligence
The staggered rollout of Apple Intelligence "could dampen excitement" for the new smartphones, Piper Sandler analyst Matt Farrell said in a client note Tuesday.
"We acknowledge it is still early in the AI journey, but we continue to be unsure if the current offering moves the needle for most users," Farrell said. He rates Apple stock as neutral with a price target of 225.
The lack of specifics around the timing of the release of Apple Intelligence was the "key missing element" from Monday's presentation, JPMorgan analyst Samik Chatterjee said in a report.
Still, the upgrades to the iPhone and Apple wearables were generally positive, he said. Chatterjee rates Apple stock as overweight with a price target of 265.
Apple's New Handsets Called 'Solid Upgrades'
Apple's decision to hold pricing steady for the iPhone 16 series vs. the iPhone 15 series shows how savvy the company is, Melius Research analyst Ben Reitzes said in a note.
"It demonstrates how Apple is looking at the total economics of the iPhone — a device that drives higher margin services because of the new software," he said. Reitzes kept his buy rating on Apple with a price target of 265.
Evercore ISI analyst Amit Daryanani called Apple's new iPhones "solid upgrades." The new handsets include speedier processors, improved cameras and slightly larger displays for the Pro models.
The coolest iPhone AI feature is the Visual Intelligence tool, he said. The tool lets you use your camera to instantly learn about anything you see, be it a plant, animal, business or other object.
Apple Stock Gets Price-Target Hike On iPhone 16 News
Wedbush Securities analyst Daniel Ives reiterated his outperform rating on Apple stock and raised his price target to 300 from 285 after the event.
"The new era of personalization and how consumers interact with their iPhones has now begun and we believe this will cause a renaissance of iPhone growth (high-single-digit growth upside) for Apple over the next 12 to 18 months and drive shares higher with a $4 trillion market cap in 2025," Ives said in a client note.
Apple Stock Drops On Court Ruling
On the stock market today, Apple stock sank 0.4% to close at 220.11.
Apple shares fell after the the European Court of Justice, the European Union's highest court, upheld an order for Ireland to recoup up to 13 billion euros, equivalent to $14.35 billion, plus interest in taxes from Apple.
The European Commission, the EU's executive arm, argued that Ireland had granted Apple benefits in contravention of EU state-aid rules, allowing the tech giant to pay substantially less tax than it owed.
Apple stock is on the IBD Tech Leaders list.
Apple ranks third out of nine stocks in IBD's Telecom-Consumer Products industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 91 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
