SSNLF - Apple: Upgrading iPhone For AI Is An Option Not An Obligation

2024-06-19 05:46:30 ET

Summary

• Apple's stock surged more than 12% after unveiling AI features at WWDC 2024, sparking excitement for potential upgrade cycle.
• The new AI features for writing, images, and Siri are unlikely to significantly drive upgrades, as similar capabilities are available on various other devices people already use.
• Despite the rollout of Apple Intelligence, it is unclear when Apple will introduce AI features to the iPhone in China, and consumers are increasingly turning to local brands.
• The stock is currently trading at premium valuations, with all of Apple's valuation multiples significantly above their 5-year averages despite the current growth deceleration.

Investment Thesis

The release of AI features across all Apple (AAPL)'s products has sparked market excitement, pushing the stock higher by 12% in a week. Earlier this year, the stock was under pressure due to weak iPhone sales, particularly in China. However, given the intensifying competition from the current GenAI boom, it was not surprising that investors were eager to see Apple's new AI initiatives at WWDC 2024....

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