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To Buy or Not to Buy Apple Stock Pre Sept. 9 iPhone 16 Event?
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Apple (AAPL - Free Report) is set to host an event on Sep. 9, in which it is expected to launch the Apple Intelligence-powered iPhone 16 line-up of devices. The company is also expected to reveal details about the Apple Watch 10.
Apple unveiled Apple Intelligence, an advanced personal intelligence system seamlessly integrated into iOS 18, iPadOS 18 and macOS Sequoia, at its annual developers’ event — the Worldwide Developers Conference (WWDC) — on June 10.
The new iPhone 16 and iPhone 16 plus are expected to be powered by the A18 chip with 8GB for Apple Intelligence support. The iPhone 16 Pro and iPhone 16 Pro Max phones are expected to be powered by the A18 Pro chip.
AI Focus Aids AAPL’s Prospects
Apple has been playing catch-up in the AI space with Alphabet (GOOGL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) , its peers in the “magnificent seven” group. Following the launch of Apple Intelligence, its competitive position is expected to improve.
Since WWDC, Apple shares have jumped 18.6%, outperforming the Zacks Computer-Micro industry’s rise of 17.5% and the Zacks Computer & Technology sector’s return of 1.6%.
However, will the AAPL stock’s bullish run continue with the launch of the Apple Intelligence-powered iPhone 16 line-up of devices, or will it fizzle out?
Let us dig deep to find out what awaits Apple investors.
Apple Outperforms Sector Since WWDC
Image Source: Zacks Investment Research
Leveraging the power of GenAI models, Apple Intelligence aims to enhance user experience across iPhone, iPad and Mac by combining robust language and image understanding with personal context. This technology, powered by Apple silicon, promises to simplify and accelerate everyday tasks while maintaining Apple’s stringent privacy standards.
Siri, powered by Apple Intelligence, will become more natural, contextually aware and capable of handling complex tasks. Users can communicate with Siri using both voice and text, and the assistant can now maintain context across multiple requests. Siri’s new design features an elegant glowing light around the screen edge when active, and its functionality extends to provide device support and answer detailed questions about using the iPhone, iPad and Mac.
In a significant enhancement, Apple is integrating ChatGPT into its platforms, allowing users to access its expertise directly within iOS 18, iPadOS 18 and macOS Sequoia. Siri can utilize ChatGPT’s capabilities, with user consent, to provide more detailed and accurate information. ChatGPT will also be available in the systemwide writing tools, enhancing content creation with advanced language models and image generation.
Services Business: Key Catalyst for AAPL Stock
Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as the company’s strong growth driver. In the fiscal third quarter, Services revenues grew 14.1% year over year to $24.21 billion and accounted for 28.2% of sales.
The Services business benefits from the growing demand for Apple TV+ content and the adoption of Apple Pay. It recently expanded Tap to Pay on iPhone to more markets, including Japan, Canada, Italy and Germany.
New updates include the U.S. national park hikes and custom walk routes and Apple Maps, the ability to pay with rewards using Apple Pay, collaborative listening with Apple Music, and a redesigned Apple Fitness+ to boost user experience.
Apple expects the September-end quarter’s (fourth-quarter fiscal 2024) revenues to grow at the same rate as the June-end quarter on a year-over-year basis. For the Services segment, Apple expects a double-digit growth rate, similar to the first three quarters of fiscal 2024.
Apple Shares Overvalued
Image Source: Zacks Investment Research
The AAPL stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
Apple is trading at a premium with a forward 12-month P/E of 30.59X compared with the sector’s 26.47X and higher than the median of 27.64X, reflecting a stretched valuation.
What Investors Should Do With AAPL Stock?
Apple’s AI push is attractive for growth-oriented investors. The Services business has emerged as AAPL’s new cash cow with an expanding content portfolio for Apple TV+ and Apple Arcade. An expanding user base of more than 2 billion active devices makes Apple’s investment profile attractive.
However, Apple’s sluggish China business has been a headache. Greater China sales decreased 6.5% year over year to $14.73 billion, accounting for 17.2% of total sales in the fiscal third quarter.
Image: Bigstock
To Buy or Not to Buy Apple Stock Pre Sept. 9 iPhone 16 Event?
Apple (AAPL - Free Report) is set to host an event on Sep. 9, in which it is expected to launch the Apple Intelligence-powered iPhone 16 line-up of devices. The company is also expected to reveal details about the Apple Watch 10.
Apple unveiled Apple Intelligence, an advanced personal intelligence system seamlessly integrated into iOS 18, iPadOS 18 and macOS Sequoia, at its annual developers’ event — the Worldwide Developers Conference (WWDC) — on June 10.
The new iPhone 16 and iPhone 16 plus are expected to be powered by the A18 chip with 8GB for Apple Intelligence support. The iPhone 16 Pro and iPhone 16 Pro Max phones are expected to be powered by the A18 Pro chip.
AI Focus Aids AAPL’s Prospects
Apple has been playing catch-up in the AI space with Alphabet (GOOGL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) , its peers in the “magnificent seven” group. Following the launch of Apple Intelligence, its competitive position is expected to improve.
Since WWDC, Apple shares have jumped 18.6%, outperforming the Zacks Computer-Micro industry’s rise of 17.5% and the Zacks Computer & Technology sector’s return of 1.6%.
However, will the AAPL stock’s bullish run continue with the launch of the Apple Intelligence-powered iPhone 16 line-up of devices, or will it fizzle out?
Let us dig deep to find out what awaits Apple investors.
Apple Outperforms Sector Since WWDC
Image Source: Zacks Investment Research
Leveraging the power of GenAI models, Apple Intelligence aims to enhance user experience across iPhone, iPad and Mac by combining robust language and image understanding with personal context. This technology, powered by Apple silicon, promises to simplify and accelerate everyday tasks while maintaining Apple’s stringent privacy standards.
Siri, powered by Apple Intelligence, will become more natural, contextually aware and capable of handling complex tasks. Users can communicate with Siri using both voice and text, and the assistant can now maintain context across multiple requests. Siri’s new design features an elegant glowing light around the screen edge when active, and its functionality extends to provide device support and answer detailed questions about using the iPhone, iPad and Mac.
In a significant enhancement, Apple is integrating ChatGPT into its platforms, allowing users to access its expertise directly within iOS 18, iPadOS 18 and macOS Sequoia. Siri can utilize ChatGPT’s capabilities, with user consent, to provide more detailed and accurate information. ChatGPT will also be available in the systemwide writing tools, enhancing content creation with advanced language models and image generation.
Services Business: Key Catalyst for AAPL Stock
Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as the company’s strong growth driver. In the fiscal third quarter, Services revenues grew 14.1% year over year to $24.21 billion and accounted for 28.2% of sales.
The Services business benefits from the growing demand for Apple TV+ content and the adoption of Apple Pay. It recently expanded Tap to Pay on iPhone to more markets, including Japan, Canada, Italy and Germany.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
New updates include the U.S. national park hikes and custom walk routes and Apple Maps, the ability to pay with rewards using Apple Pay, collaborative listening with Apple Music, and a redesigned Apple Fitness+ to boost user experience.
Apple expects the September-end quarter’s (fourth-quarter fiscal 2024) revenues to grow at the same rate as the June-end quarter on a year-over-year basis. For the Services segment, Apple expects a double-digit growth rate, similar to the first three quarters of fiscal 2024.
Apple Shares Overvalued
Image Source: Zacks Investment Research
The AAPL stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
Apple is trading at a premium with a forward 12-month P/E of 30.59X compared with the sector’s 26.47X and higher than the median of 27.64X, reflecting a stretched valuation.
What Investors Should Do With AAPL Stock?
Apple’s AI push is attractive for growth-oriented investors. The Services business has emerged as AAPL’s new cash cow with an expanding content portfolio for Apple TV+ and Apple Arcade. An expanding user base of more than 2 billion active devices makes Apple’s investment profile attractive.
However, Apple’s sluggish China business has been a headache. Greater China sales decreased 6.5% year over year to $14.73 billion, accounting for 17.2% of total sales in the fiscal third quarter.
A stretched valuation is concerning.
Apple currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.