Apple's new iPhone and AI features unveiled
Apple captured the attention of the global tech community on September 10th when it unveiled its latest flagship iPhone. The new iPhone brings a host of new AI features, including an improved Siri voice assistant and a smart camera feature for professional video editors. However, these features are not all coming at once, but will be phased in over the next few months. Analysts note that the new iPhone and its AI features are broadly in line with expectations set by Apple's previously announced Apple Intelligence AI program.
Market competition and challenges
Despite the highlights of Apple's new iPhone and AI features, some analysts warned that this incremental approach to rolling out AI features could influence real-time buyer decisions. In today's competitive smartphone market, competitors like Samsung and Huawei have long included AI features in their flagship products. It's also worth noting that Apple has yet to find an AI partner in China, one of its biggest markets, after iPhone sales have been on a steady decline there for more than a year.
Share price and market reaction after the product launch
In addition to the iPhone, Apple also unveiled a new version of its smartwatch and AirPods, yet Apple's share price was largely unchanged after Monday's event. Currently, valuation models show Apple shares are 18.9% overpriced, and based on analysts' average price targets, Apple has little upside.
Different Investment Banks' Views
Analysts at Jefferies say the iPhone 16's new AI features are in line with expectations, but an increase in the price of old units on trade-ins would be more likely to attract customers and spur upgrade cycles. They say Apple needs to offer more attractive trade-in prices, especially in China, to entice customers to upgrade to the new iPhone, especially if there are few hardware changes in the new model. Jefferies expects Apple's AI features to only gradually drive accelerated sales growth, and that expectations for a near-term rebound in sales could cool. The investment bank maintains a Buy rating on Apple, with a $205 price target.
Evercore analysts say Apple's new product announcements, particularly on the AI front, are a more refined version of the company's WWDC announcements in June, and Evercore believes Apple's phased rollout of AI features could lengthen the replacement cycle for iPhones, but still keep overall sales growth positive. The investment bank expects iPhone revenue to continue to grow in 2025 and 2026, and says the new Apple Watch and AirPods should boost wearables revenue, which has been stagnant in recent quarters. Evercore maintains an outperform rating on Apple, with a $250 price target.
