Apple's iPhone 16 AI Features Underwhelm Wall Street, But Analysts Remain Optimistic

Apple spent big on AI and with iPhone 16 it's paying off, analyst says

Christine Short, Head of Research at Wall Street Horizon, spoke with Quartz for the latest installment of our "Smart Investing" video series. Watch the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and clarity. ANDY MILLS (AM): On Monday, Apple announced a slew of new product updates, including the first iPhone built from the ground up using Apple Intelligence. Are there any tools you're seeing in what Apple (AAPL) shared that you're most excited about? Christine Short (CS): Yeah, the iPhone 16, the new AirPods using hearing aid technology. It was interesting because typically after a big product launch like that, the stock has either flattened out or gone down. It doesn't necessarily shoot up. And we actually saw investors really happy about the new product line. It wasn't just changes to the camera or new colors. There were some meaningful changes in products that could lead Apple forward and they've been doing quite well this year. They've remained firm when some of the other tech companies have been all over the place. But I think it's a good prospect for Apple going to the second half of the year here. AM: On the surface, they're doing a good job at incorporating the power of AI into the products that they currently have. Do you see it materially changing their bottom line? CS: They're investing a lot of money so that's gonna come out of that. But look, these products seem to excite investors. Let's see if they excite the consumer, as we just talked about, the consumer feels pretty strapped now. These are not cheap items. They're on the higher end. These phones are over a thousand dollars and so is it gonna be enough to have people upgrade? Are they gonna upgrade from what they currently have? The National Retail Federation does this back-to-school survey and it showed that folks bought less electronics heading into this school year because they kind of bought them all last year. And so that was sort of the big cycle of product upgrades. And will this be enough for people to upgrade again just a year later? I'm not sure if it's going to move the needle just because of how shaky the consumer is, but we'll see. There are those people that are early adopters and want to have everything new and I think, again, the investor reaction to it was quite positive because they tend to be sort of muted after these product launches. AM: Did you see anything in their presentation that seemed like kind of a whiff to you? CS: No, I mean I've thought that in the past for sure. Like I said, sometimes there's just really no notable updates. But this seems like one of the more exciting ones that I've watched in a while and I think it was because of that incorporation of AI. There were some health benefits in there. There were just different things than we've seen before. So I think they really stepped it up yesterday. AM: They've got a whole bunch of new products that will be for sale in time for the holiday season. Do you see this affecting their earnings for Q4? CS: Yeah, look, I think the consumer still remains kind of murky. We're not sure if people are going to shell out for those higher cost products. I do think they were very interesting. I think it certainly puts them in a better position than prior to announcing those products yesterday. However, let's see what happens with next month's retail sales. July was very high for retail sales. We saw 1% growth that was the highest since January of 2023. So it shows there are, you know, a certain sec of consumers that are still willing to spend, they're willing to put it on their credit card, they're willing to take it out of savings. And so I think that bodes well for Apple going into the holiday shopping season.

Wall Street Apple analysts disappointed by new iPhone's underwhelming AI features

Apple 's high stakes September launch event left some Wall Street analysts feeling unsettled. The largest company in the U.S. announced a host of new products Monday at its California headquarters, including a new Apple Watch, AirPods and the highly anticipated iPhone 16 that harnesses AI tools called Apple Intelligence. While the new products largely matched Wall Street's expectations, the event left analysts expressing doubts over whether the new AI tools can drive as robust of a handset upgrade cycle as previously anticipated. AAPL 1D mountain Apple shares slip after September launch event "We don't view the AI-related offerings as compelling enough in the near term to drive significant demand, given macro risk in China and regulatory hurdles in Europe and China, limiting geographic reach of Apple Intelligence," wrote Barclays analyst Tim Long. Apple briefly fell as much as 1.9% to $216.73 in early trading Tuesday. Barclays reiterated its underweight rating and $186 price target on Apple after the product debuts Monday, implying about 16% downside from yesterday's close. The delayed AI launch also creates uncertainty for sales volumes over the next two quarters, Long added. Bernstein's Toni Sacconaghi called the new product announcements "more evolutionary than revolutionary," concluding that the enhanced AI functions are on a par with current competition. UBS analyst David Vogt viewed the event as "anticlimactic," adding that Apple offered no "killer" AI application. The product rollout offered a "positive refresh," but that may not be enough to convince investors to buy in, noted Wells Fargo analyst Aaron Rakers. "Apple Intelligence to be rolled out in Beta version in October, but no specific timeline issued for broader consumer availability maintains the uncertainty we were expecting the event to resolve," wrote JPMorgan's Samik Chatterjee, calling the AI details "blurry." MoffettNathanson's Craig Moffett added that offering Apple Intelligence free to users signals that that it may take time for the tool to become a "stand-alone" revenue driver for company led by CEO Tim Cook. Elsewhere, Piper Sandler's Matt Farrell reiterated his neutral rating and $225 price target, noting that a slow rollout of Apple Intelligence could actually hamper enthusiasm for the features. He also views the "super cycle" expectations for consumers to upgrade their phones to newer models as already priced in to Apple shares, which are down more than 8% from mid-July peak. "We see the September event as a modest negative for AAPL given a lack of positive surprises and slightly less aggressive promotions from carriers," said Keybanc analyst Brandon Nispel.

Apple's Glowtime Event Fails To Dazzle Fans Like AI Competitors, But Analysts Say There's No Rush For A Game-Changing Product Just Yet - Apple (NASDAQ:AAPL)

Apple Inc.'s AAPL latest iPhone 16, featuring long-awaited AI capabilities, debuted at the Glowtime event on Monday, but failed to create the anticipated buzz among fans. What Happened: The iPhone 16 launch, which was heavily anticipated, did not meet the high expectations set by Apple's AI competitors. CEO Tim Cook and other Apple executives took a more laid-back approach to showcasing the new hardware. The event, dubbed "Glowtime," was centered around AI, with Apple emphasizing the device's AI capabilities, including Writing Tools, AI-generated emojis, and the camera's visual intelligence. See Also: Apple Launches Watch Series 10: Larger Display, Sleeker Design, Starting At $399 Despite these features, the event did not leave a lasting impression, especially compared to the flashy announcements made by other AI giants like OpenAI and Alphabet Inc.'s Google. With 1.5 billion iPhones in use worldwide, according to Wedbush Securities, Apple's strategy may be to focus on enhancing user experience rather than rushing to break boundaries in AI. Analysts, including Gene Munster from Deepwater Asset Management, believe that Apple's approach may be strategic. Munster noted that the new AI features represent a significant paradigm shift, akin to the transition from flip phones to touchscreens. He suggested that consumers will better appreciate these advancements through hands-on experience in Apple stores. "It's a new paradigm, and the paradigm will change how almost all humans will interact with tech," Munster said, reported Business Insider. Why It Matters: The lackluster response to the iPhone 16 launch has had a tangible impact on Apple's stock. The company's shares dipped to a four-week low following the event, falling 1.4% to $218 a share by 3:00 p.m. ET on Monday. The stock further fell 1.15% during Monday's premarket. Furthermore, the iPhone 16's AI features have failed to sway some Chinese buyers, with many opting for Huawei's AI-enhanced phones instead. This is particularly significant given the importance of the Chinese market in the global smartphone industry. Meanwhile, a top analyst highlighted a significant omission in the new Apple Watch, unveiled at the same event, which could further impact Apple's standing in the tech market. Bloomberg columnist Mark Gurman took to X, formerly Twitter, and pointed out that users of Apple Watch Series 6 or newer will lose a vital health feature if they upgrade to the new Apple Watch. Read Next: Elon Musk Reveals Timeline For Tesla's Dojo Supercomputer Upgrade 'Comparable To A Nvidia B200 Type System' Photo courtesy: Apple Market News and Data brought to you by Benzinga APIs

Apple Reveals How It Intends To Glow Using AI Power - Apple (NASDAQ:AAPL)

This week kicked off with Apple Inc AAPL day, more precisely, "It's Glowtime" event. Along with unveiling novelty hardware, the goal was to address concerns that the tech titan is losing its edge in the AI era that is unfolding. As expected, Apple revealed some fresh hardware. Apple unveiled its iPhone 16 lineup as well the new Watch Series 10to celebrate the 10th anniversary of the Apple Watch. The landmark celebratory watch line will be much lighter and thinner, with the biggest screen display ever. As for the iPhone 16, there will be new buttons and larger sizes, but it won't feel dramatically different from last year's models besides a vertically aligned camera module, as opposed to diagonal, along with better camera control. The iPhone 16 will come without the revamped Siri and Apple Intelligence feature as they will come with iOS 18.1 software update. New Features And Entry To A New Market Along with updates to its Apple Watch and its AirPod headphone that include automatically lowering the volume when users start in-person conversations and declining calls with the shake of a head, Apple also revealed that the Pro version will have the option to be used as a "clinical grade" personal hearing aid for people who suffer from mild or moderate hearing loss, subject to regulatory approval that is expected soon. The feature is expected to be available as early as this fall in the U.S and more than 100 countries and promises to disrupt the growing hearing aid market. Speaking of health, watchOS is getting a sleep apnea detection feature while there was no mention of blood pressure tracking, probably due to the recent legal action and patent dispute that made Apple remove blood-oxygen sensing. Apple's Siri novelty follows the footstep of Google and its Google Lens. By pointing iPhone's camera at a place of business or any information sign, users will be able to ask Siri to provide more information about it, such as getting restaurant menu, hours, etc. Apple showed its landmark product is primed for the upcoming AI features. Considering that Apple is quite late to the AI features party compared to its peers like Google, it needs to deliver. Therefore, it cannot risk rolling out the features before they are picture-perfect. With its event, it showed how it intends to glow, revealing the direction of its AI strategy, emphasizing it is now designing its devices for Apple Intelligence from the ground up. Undoubtedly, Apple is trying to bank on AI to boost its sales but only time will show if it will be as successful at it as it was at monetizing Steve Job's "inventions. DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice. This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy. Market News and Data brought to you by Benzinga APIs