Apple (NASDAQ: AAPL) held its annual September event this week, introducing the iPhone 15, the next generation of Apple Watch Ultra, and an update to AirPods Pro. The company’s shares declined about 2% after the presentation, which is common on the day following the event.
The main highlight of the event was the long-anticipated switch in iPhone charging ports from Lightning to USB-C, due to European regulations to reduce waste. While there weren’t any groundbreaking product updates, the small changes in software across Apple’s lineup could indicate more significant developments in the future.
Here are three things that smart investors know about Apple’s dominant business:
1. Apple is gradually incorporating AI into its products
In July, Bloomberg reported that Apple had developed a custom framework for building AI models and created its own version of OpenAI’s ChatGPT called Apple GPT. The company’s Q3 2023 earnings report showed increased spending on research and development, driven by a focus on generative AI technologies. Instead of directly discussing AI, Apple is slowly introducing AI-enabled features to its devices. With its strong market shares in various product categories, Apple has the potential to become a major driver in the adoption of AI.
The September event showcased how AI is improving features across Apple’s devices. Siri, the virtual assistant, is now 25% more accurate thanks to AI. Apple Watch wearers can soon use a finger tap to answer calls, pause music, or access information like the weather. By enhancing usability through AI, Apple aims to increase sales and capture market share from competitors.
2. Apple is using the iPhone to promote the Vision Pro
Apple’s first-ever VR/AR headset, the Vision Pro, is set to release in 2024. This market is projected to be worth about $17 billion by 2029, with a compound annual growth rate of 45%. Apple has a history of entering new industries and quickly establishing dominance, which bodes well for its potential in the VR/AR market.
While the initial price of the Vision Pro at $3,499 may restrict consumer access, future iterations are expected to be more affordable. Apple strategically showcased a new feature at the September event that allows the iPhone 15 to film spatial video, which can be viewed directly on the Vision Pro. Collaborations between devices can be instrumental in building the user base for the Vision Pro.
3. Apple’s stock is currently trading at a low price
Apple’s stock has decreased by 5% since June, reaching one of its lowest price points in three months. Disappointing Q3 2023 earnings, including revenue declines in three product categories, contributed to the sell-off. Macroeconomic challenges may affect sales in the near future.
However, this stock slump presents an opportunity for long-term investors. As share prices declined, Apple’s value increased. In terms of price-to-earnings ratio, Apple offers more value compared to Amazon, Meta Platforms, and Microsoft, with only Alphabet having a slightly better ratio.
Despite temporary economic conditions, Apple’s investments in AI and VR/AR position it for long-term success. Coupled with the recent stock dip, Apple is an attractive investment for those seeking long-term growth.
*Stock Advisor returns as of September 11, 2023
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
