Could we get an AI “nothing-burger” from Apple (AAPL) on Monday, September 9, when the company rolls out its latest iPhone?. Which are supposed to mark Apple’s advent as a serious smartphone AI player.
All indications are that Apple’s AI features on the iPhone will be distinctly underwhelming.
And that’s a potential problem for the stock-up 15.08% for 2024 and ahead 13.67% for the last three months as of the close on September 6. Wall Street analysts traditionally count on the launch of a new iPhone in the fall to power an increase in phone sales in the months ahead. That traditional pattern is baked into the target price forecasts for many analysts. Here’s Morningstar’s latest take, for example: “We continue to expect strong revenue growth in fiscal 2025 as users upgrade their iPhones to take advantage of Apple’s generative artificial intelligence features, requiring the latest and greatest hardware. We now forecast double-digit iPhone revenue growth in fiscal 2025.”
Apple Intelligence, a new suite of AI tools that includes an updated Siri digital assistant, is still a work in progress. Apple Intelligence has faced numerous delays, and many key features won’t arrive until next year, according to reporting by Bloomberg’s Mark Gurman. For now, the technology is focused on summarizing messages and notifications, rather than matching the dazzling interactivity of rival smartphones. The company is planning to begin rolling out Apple Intelligence to customers as part of software updates coming by October, Gurman wrote at the end of July. That means the AI features will arrive a few weeks after the initial iOS 18 and iPadOS 18 releases planned for September. Even when Apple Intelligence launches with iOS 18.1 and iPadOS 18.1, it will be missing features including some of the most significant changes to Siri, such as the ability to use on-device data to help field queries and for the system to use what is on a person’s screen to provide context for answers, according to Gurman.
The stakes for Apple and Apple shareholders are relatively high. The company has only just begun to emerge from its longest sales slump in decades. And Apple still faces a slowdown in sales in China, the company’s largest market outside the United States.
In line with recent practice Apple will introduce four new iPhone models: the iPhone 16, 16 Plus, 16 Pro and 16 Pro Max. As in 2023, the changes to the non-Pro iPhones will be minor although the phones will gain faster processors and an increase in memory to 8 gigabytes from 6 in order to support those AI features. The iPhone 16 Pro and Pro Max, will show an increase in screen size to 6.3 inches on the smaller model, from 6.1 inches and going to 6.9 inches from 6.7 inches on the Max version. The Pro models also get speedier chips with an enhanced neural engine that Apple says is optimized for AI.
And camera enhancements for the Pro models including a dedicated, touch-sensitive button on the right side of the phone for taking photos and video that will allow a user to lightly press it to focus on a subject and then press harder to take a picture, Gurman reports. It will also be capacitive, allowing a user to swipe across it to move between still and video modes and zoom in and out.
I don’t see a compelling argument to get me to upgrade from my aging iPhone SE. If enough Apple users feel as I do, Apple will turn in lackluster sales growth in its big December quarter. Which would hit the stock price in early 2025.
If enough Wall Street analysts find Apple’s product event on Monday ho hum, then the stock will face pressure well before the end of the year.
The event is scheduled for 10 a.m. Pacific time.
