Apple (AAPL) is likely to take its shareholders on an even wilder ride in the next six months than they’ve been on since the December all-time high at $199.62.
The end result, I think is likely to be a renewed rally beginning in the fall–if you can either hold on through the volatility until then or see your way clear to timing when to buy and sell.
Just a brief look backward. Apple shares are down 9.96% for 2024 to date as of March 27. They’re down 10.15% in the last three months.
The shares hit an all-time high just short of $200 in December and on their path to their price of $171 on March 28, they hit $182 on January 4, rebounded to $195 on January 123, and then fell again to $169 on March 7.
Why the past volatility and why do I think there’s so much volatility ahead?
First, iPhone sales in China have plunged and it looks like more bad news ahead. iPhone shipments in China fell about 33% in February from a year earlier, according to official data from the Chinese government.The February decline marks a second consecutive month of lower shipments. In January, the company shipped a total of roughly 5.5 million units, or about 39% fewer handsets than in the prior year, according to China Academy of Information and Communications Technology figures. I don’t see a quick turnaround in the months ahead. So this drop in sales in Apple’s second biggest market is a dark cloud hanging over the stock for the rest os 2024, in my opinion.
Second, Wall Street and technology analysts have concluded that Apple missed the boat badly on artificial intelligence. You may not be impressed with the AI capabilities in Samsung’s newest smart phones, but it’s never a plus to have nothing to offer on a hot new technology when your competitor is already selling phone with a claim to AI inside. I think this lag in AI has been, more than the China sales plunge, the reason for the last 10% of Apple’s share drop in 2024. Suddenly, Apple isn’t the coolest kid on the block anymore. (The drop in iPhone sales in China may be related to Apple’s lag in AI. There’s evidence from the Chinese market that some percentage of Chinese iPhone owners have put off their purchase of a new iPhone in order to wait for the coming generation of iPhones with AI.)
Third, Apple recognizes its AI problem and the company has decided to throw its full resources at its June Worldwide Developers Conference into demonstrating that AI is on its way to the iPhone and other Apple products. Insider “leaks” say that the company will to unveil its long-anticipated artificial intelligence strategy at the June 10-14 conference. (The messaging has been the usual Apple-clever with company marketing executive Greg Joswiak saying that the event is “going to be Absolutely Incredible.” Get it?) Apple is expected to unveil its next major software updates for the iPhone, iPad, Mac, Vision Pro headset and smartwatch—and its new AI strategy will be the core of the planned iOS 18 upgrade. Apple’s planned upgrades will include new proactive AI features to assist users in their daily lives. But not an Apple generative AI chatbot, though. Instead, Apple is holding talks with potential partners like Google and OpenAI to supply generative AI services, according to Bloomberg. The iOS 18 update is expected to be the most ambitious overhaul of the iPhone’s software in its history, according to people working on the upgrade. (More of those “leaks.”) The company is also planning a refresh of the Apple Watch’s software and the first major update to the operating system running on the Vision Pro headset.
I expect the splashy announcement of those new planned features will go long way to reassure analysts and investors that Apple gets AI and it planing to catch up. Fast.
Apple is planning to launch new iPad models in early May, again according to Bloomberg. Apple’s overseas suppliers have increased production of the company’s new iPad models. The new iPad Pro models will have Apple’s latest M3 chip and will come with redesigned versions of the Magic Keyboard and Apple Pencil. This update would represent Apple’s first overhaul to that lineup since 2018.
All this–the announcement of a slew of AI features in an ambitious overhaul of the iPhone operating system and new models to refresh the iPad–will, I expect generate a bounce in the stock. At the worst the events should end the steady erosion of the share price.
Fourth, but notice that all this AI hoopla is about planned products and features. And not actual products that anyone can buy in a store tomorrow. As the timing of the iPad launch should remind us, announcing a new product (even via “leaks”) is not the same as putting a product online and in stores for sale. Apple’s initial plan was to launch the new iPads by late March or early April, but it is still working to finish the software for the devices, Bloomberg added in its reporting.
If trading follows past patterns, I’d expect that the hoopla effect of the splashy AI announcements will start to wear off in July and August. And that much of the post-June developers conference bounce will have been sliced from the stock again by the beginning of September. Especially since I expect more bad news from China on iPhone sales by then. Almost certainly at Apple’s July conference call on the June quarter numbers.
Which would, then, in my assessment, clear the way for buying Apple shares again in early September ahead of the news stories about lines outside Apple stores to buy the new AI iPhone. And ahead of the two best quarters for Apple’s sales every year.
Threading your way through this volatility would be hard enough if it played out according to my schedule. I don’t expect that it will. Events don’t follow my logical schedules very closely, in my observation.
So what do you do?
I think you have three choices, if you believe as I do that you want to own Apple for the December 2024 quarter.
You can buy ahead of the June 10-14 developers conference in an attempt to catch a low before any bounce from that event. And then stick it out during any summer volatility to the downside.
Or you can wait for the July-August reality slump in order to buy before September product releases.
Or you could buy ahead of the June developers conference, and then either take profits if the bounce is big enough and rebuy in August or if the volatility that I’ve outlined fails to show up as I’ve prophecied, hold on for my predicted September rally.
It’s a tough timing challenge.
In my online portfolio I going to follow choice two and wait for the July-Augut reality slump before buying Apple again in my Jubak’s Picks 12-18 month portfolio.
