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After a slow start to 2024, Apple (AAPL) stock has performed roughly in line with the S&P 500 Index ($SPX), gaining about 14.7% year-to-date. However, AAPL stock is once again in the spotlight after the company introduced a range of new products, including the much-anticipated iPhone 16 series, Apple Watch Series 10, and AirPods 4, at Monday's "It’s Glowtime" event.
Despite the buzz around these launches, Apple’s stock is dropping in pre-market trading on Tuesday. Outside of Glowtime, the European court ruled against Apple in its long-standing tax dispute in Ireland, which means that after a decade-long battle, Apple lost the case over a $14.4 billion tax claim.
However, this lackluster reaction in the stock also mirrors the initially tepid reaction to “Apple Intelligence” when it was first announced earlier this year.
Does this mean the tech giant’s stock will remain in the red, or could it still outshine the market in the long run? Let’s examine what’s happening with Apple stock and whether it’s poised to glow brighter.
What Happened at the Glowtime Event?
Apple’s Glowtime event featured new hardware, but lacked significant surprises. While the company introduced the highly anticipated iPhone 16, with improved photo and video features and a Camera Control button, it didn’t market the artificial intelligence (AI) functionality very aggressively.
Moreover, Apple expects a slow rollout of AI features that could elongate the consumer upgrade cycle. However, several key takeaways from the event are worth considering:
- Apple Intelligence: The company introduced a beta version of its AI integration, set for release in October. While it’s still in its early stages, this AI feature could play a significant role in future iPhone upgrades and product developments.
- Camera Upgrades: Apple continues to refine its camera technology, one of the key reasons many consumers upgrade their phones. The Camera Control button on the iPhone 16 could be a subtle but effective draw for photo enthusiasts.
- Pricing Strategy: Apple kept the iPhone 16 pricing consistent with its predecessor, making the new lineup more accessible. This could attract a broader range of buyers compared to competitors offering AI-driven smartphones at higher prices.
What Does This Mean for Investors?
While the Glowtime event didn’t reveal any game-changing innovations, the focus on incremental improvements and AI-driven features could still be promising. Apple Intelligence, even in its limited version, is a step toward integrating more AI into future devices, which could spark consumer interest in iPhone upgrades down the line.
However, it’s important to note that the full rollout of these AI features could take time, meaning consumers might hold off on upgrading until later this year or when the new model is released. This slower-than-expected integration of AI could weigh on AAPL's short-term stock performance.
The Tax Case: A Shadow on Apple’s Glow?
Another factor influencing Apple’s stock performance is the recent European court ruling. The decision is a significant financial setback. While this is a blow, how the situation evolves remains to be seen.
Moreover, Apple has solid cash reserves and financial strength to absorb the impact without significant long-term damage to its stock.
Should You Consider Apple Stock Now?
While the Glowtime event didn’t provide the immediate stock boost some may have hoped for, Apple’s long-term prospects remain solid. The company’s strategy to keep iPhone prices stable, focus on AI, and improve its flagship products could help Apple stay competitive and potentially outperform the broader market.
Apple’s increasing focus on AI technology and innovative features positions the company for sustained growth. The rollout of Apple Intelligence, coupled with new AI-driven functionalities, is expected to prompt device upgrades and attract new users. As Apple continues to refine its AI strategy and expand its product ecosystem, its growth trajectory will likely gain momentum, further strengthening its market position.
Higher demand for Apple’s products will naturally expand its installed base of active devices, which is a critical driver of Services revenue. During the last reported quarter, Apple’s Services revenue hit a record $23.9 billion, representing a 14% year-over-year growth. With the active device base growing steadily, Apple is well-positioned to see continued gains in this area.
Apple’s potential isn’t limited to consumer markets. On the enterprise side, companies are increasingly investing in Apple products to drive productivity and innovation. As businesses continue to adopt Apple’s offerings, this could further enhance the company’s market position and open additional growth opportunities.
While Apple remains a strong long-term investment, macroeconomic uncertainty and potential pressure on consumer spending provide some cause for caution. Currently, Apple stock holds a “Moderate Buy” consensus rating.
The average price target for AAPL stock is $245.05, indicating a relatively modest potential upside of about 11% from recent levels.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
