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Apple (AAPL) unveiled new AI technology that will be implemented in iPhones and other personal devices at its Worldwide Developers Conference (WWDC). Apple has struggled to sell iPhones in recent years, especially in the Chinese consumer market, so could this new technology help improve sales?
Laura Martin, Senior Media & Internet Analyst at Needham & Co., appeared on Catalysts to provide insight into why she thinks it’s too early to tell if this announcement will truly change anything for Apple sales-wise.
“I don’t think that’s possible with the current iPhone. [16] “It’s going to be available in September. In particular, there was a headline today that said Apple needs large language models in China because China doesn’t allow the use of the large language models that are in the U.S.,” Martin argued. “So all of Gen AI is [generative AI] The products that they announced are licensed for sale in China, which accounts for 20% of iPhone sales. So I think it’s still too early in the cycle. So, actually, I don’t think they’re going to beat the Wall Street consensus this year.”
To learn more about expert insights and the latest market trends, click here to watch this full episode of Catalysts.
This post Nicholas Jacobino
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Video Transcript
The other company you cover is Apple Laura, just before Apple’s recent surge, its year-to-date performance had just surpassed flat levels.
It’s currently up about 14% year to date.
From your perspective, is the growth post-Worldwide Developers Conference real or will it start to fade, especially after Apple’s quarterly earnings release?
right?
That is, why the market believes that Apple’s unveiled generative AI will actually accelerate iPhone sales more than Wall Street consensus estimates.
So I think it’s still too early.
I don’t think that will happen with the current iPhone, which will be released in September.
In particular, as you saw today, there were headlines about Apple needing large language models in China because China allows the use of large language models like those found in the US.
This means that any next-generation AI products they unveiled are unrepresentative and not even allowed in China, where they account for 20% of iPhone sales.
So I think this cycle is premature.
So, in fact, we don’t think this year’s forecasts will beat the Wall Street consensus.
But come September next year, we expect many developers will be integrating the next-generation AI features that Apple talks about.
So, I think our estimates are probably too low for the next one in this cycle, but I’m not as optimistic about the September 2024 iPhone cycle as the market is right now.
Well, interestingly, immediately following the conference, there wasn’t much reaction from Wall Street to Apple.
Then the next day, after hearing comments from people in the industry, it seemed like there was a sudden reaction to every announcement they had made.
I mean, I’m just curious, what did you think of the announcement?
Did they pass the smell test for you?
First of all, as you know, Apple is doing a $100 billion share buyback.
So, my guess is, is there anyone in the market who supports this stock?
That’s just my guess.
Well, and secondly, this is all just a judgment call and I think people are trading based on how important and how big iPhone sales are going to be because iPhones are 50% of revenues this September and so my judgment is that AI generation is not going to be that big of an issue this year, but the market is disagreeing with me.
They believe that the launch of this generation’s AI will boost iPhone sales in September and October this year.
Well, that’s why I enjoy talking to people like you, Laura.
Thank you for your interesting opinion.
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