Apple AAPL gears up for its Sep. 9 event, poised to unveil the iPhone 16 series powered by Apple Intelligence, along with insights on the Apple Watch 10.
At the Worldwide Developers Conference (WWDC) in June, the tech giant introduced Apple Intelligence, an advanced personal intelligence system integrated into iOS 18, iPadOS 18, and macOS Sequoia.
Anticipated to run on the A18 chip, the iPhone 16 lineup is forecasted to feature 8GB for Apple Intelligence support, while the Pro versions may sport the A18 Pro chip.
Apple’s Competitive AI Edge
Apple has been trailing in AI behind peers like Alphabet GOOGL, Microsoft MSFT, and Amazon AMZN. The launch of Apple Intelligence at WWDC is seen as a game-changer for Apple’s stance in the AI domain.
Post WWDC, Apple shares surged 18.6%, surpassing the Zacks Computer-Micro industry and Computer & Technology sector’s growth rates.
The looming iPhone 16 event raises the question: will Apple’s stock momentum persist or fade post-launch?
Let’s embark on an exploration to uncover the future for Apple investors.
Apple Eclipses Sector Post-WWDC
Leaning on GenAI models, Apple Intelligence aims to enrich user experiences on Apple devices by amalgamating language and image processing with personal context.
Siri, now bolstered by Apple Intelligence, promises natural interactions, contextual awareness, and multitasking capabilities. The virtual assistant gains ChatGPT integrations for advanced functionalities.
Services Segment Vital for AAPL
While iPhones are Apple’s flagship, the Services division is emerging as a lucrative avenue. Services revenue surged 14.1% YoY in the fiscal third quarter, contributing significantly to overall sales.
The Services portfolio’s growth is boosted by Apple TV+ content, Apple Pay expansions, Tap to Pay enhancements, and other innovations.
Apple Inc. Price and Consensus
Enhancements like U.S. national park hikes on Apple Maps, Apple Music’s collaborative features, and revamped Apple Fitness+ are designed to enhance user engagement.
Q4 fiscal 2024 revenue projections align with Q3 growth rates, with double-digit growth anticipated in the Services segment.
Apple’s Valuation Concerns
The current AAPL valuation, indicated by a Value Score of F, points to stretched metrics.
Apple’s forward 12-month P/E ratio at 30.59X exceeds sector and median values, indicating a premium valuation status.
Investment Considerations for AAPL
Apple’s AI advancements and booming Services business make it an appealing option for growth-minded investors. However, challenges in the Chinese market and stretched valuations are areas of caution.
With a Zacks Rank #3 (Hold), a strategic entry point is advised for prudent investors. Explore stocks rated #1 (Strong Buy) for potential opportunities.