$AAPL: Bounce Back or Bust This Week ?
The Big Mystery.
The mystery concerning this FAANG & Magnificent 7 groupie Tech giant is (a) will it continue to languish in 2024 or (b) will it be able to turn things around, just like it had in the past.
Investors’ main grouse about Apple Inc is its perceived lack of development in the AI-sphere.
Practically, its peers eg. $NVIDIA Corp(NVDA)$ , $Amazon.com(AMZN)$ , $Alphabet(GOOG)$ etc…have jumped onto the AI-bandwagon and are humming the same tune.
The synergy serves to reinforce each other, pulling all their stock prices up the ladder in the process.
Even “ambitious” $Meta Platforms, Inc.(META)$ that harboured ambition to be Metaverse’s Warlord has beaten a hasty retreat and dived headlong into Artificial Intelligence instead. and reaping the benefits in the process.
Proving again the notion that one cannot go against the Market, is true.
To Be Fair.
Objectively, it is not that Apple has been resting on its laurels.
Rather, their pet-project to build an Apple EV have crashed; after an easily 10 years or more pursue.
With resources & time invested coming to a naught, it is a bitter pill to swallow.
However, bounce back it must, as one of the leading Tech giants.
The world expects it to, Investors expect it to and even Apple expect themselves to.
Pivot to what now ? That is the question.
The Immediate Next.
While Apple deliberates on the next “sure-win” product, they still have to take care of business for time & tide waits for no man.
To that end, I think Apple is taking a step in the right direction and signaling to the world that they are back. (see below)
(1) Desktop & Tablet.
On Thu, 11 Apr 2024, Apple has fired the first salvo to inform the World that they are backed in the Artificial Intelligence marathon. (see above)
It is nearing the production of its M4 computer processors, equipped with AI processing capabilities.
Whatmore, they plan to update every Mac model with it.
Slated for end 2024 / early 2025 release, it will equip the gamut of Apple products:
New iMacs.
Low-end 14-inch MacBook Pro.
High-end 14-inch & 16-inch MacBook Pros.
Mac Studio.
Mac minis
Integration and processing power for artificial intelligence will be a key focus of the M4 lineup and will tie into new macOS features.
(2) iPhone.
On 21 Mar 2024, when news broke out that the 2 Tech giants were in discussion, it came as a surprise to everyone in the Industry.
Two rivals talking and discussing was simply unprecedented.
It the rumours proved to be true, it will be the 2nd strategic tie up between both partners.
Afterall, wasn’t it Google that paid Apple billions to be Apple’s Safari de-facto browser?
While Apple is “later” to the AI-scene than Samsung or $Qualcomm(QCOM)$, still its better late than never right!
Analysts at JPMorgan have just predicted a strong iPhone sales cycle in 2026 due to forthcoming AI features.
Harking back to February 2024, Apple CEO Tim Cook already revealed to investors to expect an AI announcement later this year.
All these are expected to take place during Apple’s Worldwide Developers Conference (WDC) event in June 2024.
Hedge fund investors are also warming up to the opportunity of the AI upgrade cycle, but they are uncertain whether the upgrade cycle starts with (a) iPhone 16 in September 2024 or (b) iPhone 17 in September 2025.
Coast Is Clear?
To assume that the coast is clear for Apple Inc now will be a big risk. Why? (see below)
(1) Post Iran-Israel Attack. (see above)
Although, the drones and missiles attack initiated by Iran against Israel is considered “over”, the aftermath is still filled with uncertainty.
Uncertain whether Israel will initiate a counterstrike in the near future ?
Uncertain whether there maybe interfering elements ready to stir up troubles in an already tense Middle East.
Repercussions over shipping and airline routes will continue to bring disruptions to the global supply chain and wreak havoc to oil prices in the coming days, where routes diversions equals additional demands on fuel.
(2) All Hail The New Reigning King.
On 15 Apr 2024, Apple officially ceded the “Top phone maker” accolade to Samsung.
This marks Samsung’s return to the top spot, that it has held for 12 consecutive years.
Until 2023, when Apple’s iPhone usurp the top spot from right under Samsung’s nose.
If it is any consolation, iPhone still retains the top spot in terms of revenue, despite falling to the #2 spot.
(3) Fed Chair Sang A Different Tune.
On Tue, 16 Apr 2024, Fed Chair Jerome Powell has commented about US inflation at a policy event in Washington on US-Canada economic relations, since CPI report was released on 10 Apr 2024.
In summary,
He believes there will be little change in US’s Core PCE for March over February (2.8%).
Repeating that the FOMC committee needs greater confidence that inflation is inching towards 2% target before it would be appropriate to cut interest rate.
Lastly, he clearly indicated current interest rate will likely stay in place until inflation gets closer to target, echoing recent statements by other Fed members.
His latest acknowledgement was a depart from the assuring tone in his last comment about US inflation, making market “nervous” in the process.
Bittersweet, overall !
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