To The Moon

Key Highlights:

1) Apple Intelligence

• Apple Intelligence is similar to Microsoft's AI assistant Copilot, but you can access it for free. In other words, Apple Intelligence aims to assist you in using your Apple device more easily.

• Key "Apple Intelligence" features include:

Siri: Siri will be able to perform various tasks for you, such as answering your queries using information from across apps and adding someone's address to your contact card after receiving it in a text message.

Writing Tools: Writing Tools are available system-wide and help users rewrite, proofread, and summarize text. These tools aim to strengthen and simplify your writing.

• All of the "Apple Intelligence" features, both the ones that run on-device and those that rely on Apple data centers, use Apple-developed models. Only the ChatGPT feature uses OpenAI.

• Apple will keep users' personal data secure.

2) Partnership with OpenAI

• OpenAI and Apple announce a partnership to integrate ChatGPT into Apple Intelligence experiences.

• In scenarios where OpenAI's technology is more effective at answering a user's question, Apple will allow users to opt-in to search with ChatGPT instead.

• The ChatGPT integration, powered by GPT-4, will come to iOS, iPadOS, and macOS later this year. Users can access it for free without creating an account.

• Privacy protections are built in when accessing ChatGPT within Siri and Writing Tools—requests are not stored by OpenAI, and users' IP addresses are obscured.

3) Not everyone will get access to it:

• The new Apple Intelligence on-device AI platform will run on the iPhone 15 Pro, while Mac and iPad support will be limited to devices using M1 processors or later. Apple launched the iPhone 15 Pro in September 2023 and the first M1 Macs in 2020.

Stock Analysis:

The AI announcement at WWDC failed to excite investors, leading to a 1.9% drop in Apple's $Apple(AAPL)$ stock price yesterday.

I remain constructive on Apple due to the following reasons:

1) Short-term price correction:

• Apple SVP Greg “Joz” Joswiak confirmed on March 27 that WWDC is set for June 10-14 and promised that the event will be “Absolutely Incredible.”

• Since then, Apple stock has risen as much as 16% to USD 196.89 on June 7, before dropping 1.9% to USD 193.12 at yesterday’s closing.

• Investors may have frontloaded some AI optimism, so the stock correction seems like a short-term “buy on rumor, sell on news” reaction.

2) Apple Intelligence may ignite an upgrade cycle:

• Apple may have offered just enough "AI" functionalities to incentivize people to upgrade their iPhones.

• For example, it is more natural to use Apple’s Writing Tools system-wide on Apple devices, as you do not need to go to a particular app or browser.

3) Apple still looks poised to surpass all-time high based on TA

• Apple stock closed at USD 193.12 yesterday. I am still waiting for Apple to close above USD 197.43, which is the 1.618% Fibonacci Expansion level, to target the next resistance at USD 214.40.

• A close above USD 197.43 would also indicate a breakout of the upper channel line of the Flag Pattern, suggesting that the uptrend momentum will continue.