Apple (AAPL -1%) is experiencing a slight dip today ahead of its "It's Glowtime" event at 1:00 p.m. ET, where it is expected to unveil the iPhone 16 lineup, new Apple Watches, AirPods, and AI features. This follows AAPL's June Worldwide Developers Conference, where it showcased iOS 18 with many AI-powered features. Only the iPhone 15 Pro and Pro Max fully supported these AI features, making today's iPhone 16 unveiling significant for users eager to upgrade.
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No surprises are expected in the iPhone 16 design. Despite a modest 1% year-over-year dip in iPhone revenue in June, demand remains stable. However, AAPL's design may be growing stale compared to Android-powered handsets like Huawei's tri-fold phone, which has over 3.0 million pre-orders since Friday. Samsung (SSNLF, Financial) also expects its foldable devices to sustain upward momentum through the second half of 2024.
- Huawei's pre-order success highlights a threat to AAPL's growth in China. iPhone shipments in China contracted by nearly 7% in June, while Huawei's shipments increased by 41%. Overall smartphone shipments in the region climbed by 10%, indicating that Android's diverse designs are resonating with consumers.
- Over the weekend, it was reported that AAPL's newest iPhone will feature Arm Holdings' (ARM, Financial) AI-focused V9 architecture, which commands twice the royalty revenue over the previous V8. The AI features unveiled in June helped lift AAPL's stock to record highs, and shares of ARM are jumping today as it stands to gain from increased iPhone demand.
- While the Apple Watch and AirPods will take a backseat to the iPhone, they remain significant, comprising 9% of AAPL's June quarter revenue. These products offer a compelling entry into the Apple ecosystem, with nearly two-thirds of new customers purchasing an Apple Watch last quarter, bringing its installed base to all-time highs.
AAPL's major events often see a sell-the-news reaction, followed by a reversal in subsequent trading days. AAPL's suppliers, including AVGO, CRUS, TSM, QCOM, SWKS, and QRVO, can also see movement based on announcements. AI is expected to be a key focus today, potentially boosting demand significantly this year. Last week, Broadcom (AVGO, Financial), a prominent AAPL supplier, projected a 20% revenue increase in its wireless division for the October quarter, indicating a surge in demand for AAPL's upcoming iPhones.
