Hello, tech editor Alexei Oreskovic here. The year 2024 is off to a tough start for Apple. In the day-and-a-half that the stock market has been open this year, the iPhone maker's stock has fallen by nearly 5%.
If the decline holds by the time the market closes Wednesday, that will represent a loss of more than $120 billion in market value in just two days. Two very expensive days.
The immediate cause of the drubbing was a downgrade by Barclays on Tuesday, hitting Apple's stock with an "underweight" rating (analyst-speak for "sell"). The downgrade was a manifestation of deeper investor unease with the company's prospects.
Apple's overall revenue has declined for four consecutive quarters, and the company has hinted at modest expectations for holiday sales. The iPhone, which accounts for nearly half of Apple's revenue, is facing stiffer competition in China, and the Apple Watch is locked in a patent fight that forced Apple to halt sales of certain models in the U.S. for a few days last year.
If things look bleak for the Cupertino, Calif., company, there are a few bright spots on the horizon:
Apple's services business continues to be an underappreciated giant. According to Apple bull Dan Ives's "sum of the parts" analysis, the services business is worth $1.5 trillion to $1.6 trillion on a standalone basis.
The VisionPro, Apple's $3,500 mixed reality headset, is due to go on sale this year. The company is treading cautiously with a very limited rollout of the new device—so sales of the VisionPro this year will not move the needle for Apple. But if consumers cotton to the device, it could provide a much-needed jolt of excitement to Apple's image that translates into broader sales.
Finally, Apple has yet to show its cards in the high-stakes game of generative AI. According to Bloomberg's Mark Gurman, Apple has developed its own large language model and has been internally testing an "Apple GPT" chatbot based on it for months.
If there's any doubt about how gaga Wall Street is for AI right now, just look at Microsoft's fortunes last year as it hooked up with ChatGPT-maker OpenAI: Microsoft's stock finished 2023 up 50%.
With that, here are more of today's top tech stories.
Alexei Oreskovic
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Today’s edition was curated by Rachyl Jones.
