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    • Apple shares drop after ‘Glowtime’ event
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    Apple shares drop after ‘Glowtime’ event

    Vaseline Posted on

    Topline

    Apple’s annual product launch on Monday failed to immediately win the hearts of investors, as shares of the world’s largest company plummeted during the event, largely due to previously rolled out artificial intelligence features for iPhones.

    Key Facts

    The event, dubbed “Glowtime” by Apple, marked the official debut of the company’s iPhone 16 line, which is designed to support the integration of generative AI directly into the smartphone’s operating system, and Apple CEO Tim Cook kicked off the pre-recorded video by declaring that the company is “excited to introduce the first iPhones designed from the ground up” for AI.

    New non-AI features on the iPhone 16 include a new, customizable camera control tool. The company is also emphasizing privacy in its Apple Intelligence initiative, a major talking point ahead of its generative AI push.

    Apple Intelligence features will be available in the US in October as part of a free software update, but won’t be available in Chinese and Spanish until next year. That may be a less welcome update for anyone hoping to roll out new iPhones globally starting in 2024.

    Shares of Apple fell 1% as the event focused on the iPhone 16 about an hour after it started at 1 p.m. EDT. That extended a slight decline in earlier trading and moved against a more than 1% gain for the tech-heavy Nasdaq Composite stock index.

    Apple also introduced the Apple Watch Series 10, which starts at $399 and features the thinnest interface ever for a smartwatch and a sleep apnea detector. There are also new AirPods models, which come with USB-C charging cables and are designed to integrate with Apple’s AI initiatives, including a system that allows users to nod or shake their head to answer or reject phone calls.

    Surprising fact

    Apple shares have historically underperformed the broader market on the day of the iPhone’s annual September launches, according to Morgan Stanley analyst Erik Woodring. The stock has underperformed the S&P 500 by an average of 0.6 percentage points during launches from 2013 through 2023, and the stock has fallen during 12 of the 17 previous iPhone launches, according to Bloomberg.

    Crucial quote

    The iPhone 16 “marks the beginning of a new era,” Cook said.

    What did Wall Street expect from the event?

    AI would “play a key role” on Monday, predicted Morgan Stanley Group, which identified three potential tailwinds from the event for Apple shares: iPhone 16 pricing, better batteries for the devices and more AI-related processing power in the new devices. Bank of America analyst Wamsi Mohan similarly identified price increases and more advanced AI features as drivers for the stock to beat previous launch dates. JPMorgan analyst Samik Chatterjee said other potential bullish signals would include a release of the latest iPhone operating system, iOS 18, in the first half of October and the tease of AI partners beyond OpenAI and its ChatGPT chatbot to give consumers “further reason to upgrade.”

    Large number

    14%. That’s how much Apple shares have risen since the company’s Worldwide Developers Conference in June, outpacing the S&P 500’s 2% gain in that period, thanks in large part to investor optimism for a big iPhone upgrade cycle tied to its AI features.

    Main background

    Apple is by far the world’s largest company by market capitalization, worth about $3.3 trillion as of Monday. Expectations are high for the iPhone 16, coming off its weakest quarterly iPhone sales since 2021. More than half of Apple’s revenue comes from iPhones. Features of the “Apple Intelligence” update include generative writing, custom emoji icons and an improved Siri voice assistant. Before Monday’s event, Bloomberg reported that Apple planned to announce higher-end iPhone 16s featuring silicon chips designed to support AI and a new camera button, a new line of Apple Watches equipped with a sleep apnea detection feature and two new lines of AirPod headphones.

    Read more

    ForbesApple reports record profit in June despite worst iPhone sales in yearsBy means of Derek Saul

    ForbesApple Finally Unveils iPhone AI Features, Powered by ChatGPTBy means of Derek Saul

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