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TLDR: Apple stock hit $3 trillion as AI iPhone hype builds ahead of WWDC. Investors await AI offerings to boost slumping sales, despite concerns about China business and monetization.
Apple reached its highest share price this year thanks to Wall Street’s excitement about the Silicon Valley giant’s artificial intelligence potential ahead of its Worldwide Developers Conference next week. Investors are eagerly waiting for what some see as the next major event to drive slowing iPhone sales.
Key Quote
If WWDC affects Apple stock given the AI excitement, “Historically, WWDC is not a material stock catalyst for Apple… we think this year is different as Apple formally enters the Gen AI race,” predicted Morgan Stanley analysts led by Erik Woodring.
What to Watch For
Will WWDC impact Apple stock given the AI hype?
It’s different.
“Historically, WWDC is not a material stock catalyst for Apple… we think this year is different as Apple formally enters the Gen AI race,” predicted Morgan Stanley analysts led by Erik Woodring.
Background
The last year has been an unusually cool stretch for Apple investors, as the stock’s 7% return is worse than the S&P 500’s 25% and rival Microsoft’s 23% return. Microsoft, which overtook Apple as the world’s most valuable company earlier this year, has more clearly translated the intense interest in AI into earnings growth than Apple, with its first-quarter net income 20% higher than the same period in 2023, far better than Apple’s -2% bottom line growth.
Apple has been fairly quiet in discussing its AI offerings to the public, though its chief executive Tim Cook said in February that the company has put a “tremendous amount of time and effort” into generative AI.
China.
Other than worry about Apple’s unclear path to make money from AI, the largest point of investor frustration has been a decline in its key China business, with sales in the region expected to come in 7% lower than 2022’s record $74.2 billion, according to FactSet.
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