TOP STORY
🍎 Apple Stock Has Weak Response to iPhone 16 Announcement

🎢 After the worst week of the year, the markets bounced back with the best week of the year, giving us a fantastic crash course on why panic selling and trying to time the market are generally a bad idea. 😅

• 🇨🇦 The TSX is up 3%

• 🇺🇸 The S&P 500 is up 3.4%

• 🤖 The Nasdaq-100 is up 5%

• 💾 Nvidia also bounced back this week, up 13.5%

🍎 But one stock with surprisingly little movement was Apple, with only a 0.7% bump despite the long-awaited announcement of the iPhone 16 with Apple’s AI Intelligence.

😰 Apple has a critical issue - iPhone sales have been slumping, with Apple reporting its worst quarterly sales decline since the pandemic in Q2 and dipping again in Q3.

🇨🇳 Some of this is driven by increased competition in China, but there is also a general feeling among consumers that Apple isn’t really innovating anymore.

📲 Based on research from Sherwood, over 73% of iPhone upgrading is because of an obsolete, broken, lost, or stolen phone, with only 18% of consumers upgrading due to new features. While a decade ago, only 6% of consumers had an iPhone 3 years old, nowadays it’s over 34%.

🤞 Many investors hope that the new iPhone will spur an ‘upgrade super cycle,’ with the stock surging 10% on the AI announcements back in June, so let’s take a look, see what’s new and understand why the market had such a lukewarm reaction…

🍎 AI, AI, AI (aka Apple Intelligence)

Apple’s two biggest announcements at the Apple Event were the integration of Apple Intelligence and Visual Intelligence into the iPhone.

Cutting through the buzzwords, here are the use cases Apple highlights in its keynote:

• 📝 Writing Tools: Rewrite notes and adjust the tone of messages with generative AI

• 🦖 Custom Emojis: Create new emojis just by typing a description

• 🌇 Better Image Search: Type a description of one of your old photos and find it easily

• 📧 Emails & Notifications: AI summaries and better prioritization

• 🤖 A Better Siri: Siri seems to be much more sophisticated and integrates with more apps throughout the iPhone

Last but not least, 👀 Visual Intelligence - an update so significant Apple even added a new ‘Camera Control Button’ to activate it.

📸 The feature leverages the iPhone camera + AI to “give you the ability to instantly learn about everything you see.”

Based on Apple’s demo, this can be used to pull up restaurant hours and reviews, figure out a dog's breed, and scan items (like a bike) to quickly find on Google Shopping.

🤖 It seems most (if not all) of Apple Intelligence is powered by Apple's partnership with OpenAI, which was confirmed back in June.

💰 Interestingly, Apple isn’t paying OpenAI for the use of ChatGPT, paying instead with ‘distribution and awareness,’ but is reportedly in talks to invest in the company.

💡 Before we talk about the market and analyst reaction to the Apple announcements, a quick word from this week’s sponsor, Vanguard Canada!

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TOP STORY CONTINUED
🤷‍♂️ Analysts Have a Mixed Reaction, Here’s What They’re Saying

🎯 According to Benzinga, analysts had mixed or negative reactions after Apple’s event, but the majority still maintained a “Buy” rating on the stock with an average $250 price target according to TipRanks.

📈 While some are less optimistic, many are still bullish on the iPhone upgrade supercycle. Dan Ives, Analyst at Wedbush, who increased his price target from $285 to $300 (~38% above the current price), had this to say:

📲 Apple itself is also optimistic, telling its suppliers and partners that it expects a 10% growth in shipments of the new iPhones compared with the previous models.

😬 The Flagship AI iPhone Will Launch Without AI

Not everyone was optimistic though, with some analysts concerned that the changes won’t be enough to convince consumers:

😣 Another big point of concern is that Apple Intelligence and Visual Intelligence won’t even be available in the new iPhone on launch and are only set to release months later - which may damper some of the initial momentum around the launch on Sept 20.

🔄 History Repeats Itself

💡 Based on history, it’s not actually that big of a surprise that Apple’s stock was flat after the announcements. With so much hype building up to the event, it’s likely that much of the excitement and growth was already priced into the stock.

👀 In the coming months, investors will be closely tracking early orders and sales data to gauge whether the iPhone 16 will live up to the hype with many analysts hoping trade-in deals from cellular carriers will help spur upgrading.

🙋‍♂️ My Thoughts

I’ve seen a lot of comments about how the iPhone 16 is the same old same old, but I actually think the new changes are much more exciting than what we’ve seen in previous models.

Personally, I lean bullish but not with high enough conviction to open a new position. I’m currently happy with the ~3% exposure I have from my S&P 500 holdings (Apple is currently ~7% of the S&P 500).

That said, I’ll be sure to keep a close eye and keep you updated and I’m excited to read your thoughts on Blossom! 😎

EVENTS & ANNOUCEMENTS
🛎️ Blossom Opens and Closes the Stock Market!

🥳 It was a busy week, with Blossom making an appearance at two market closes and one market open!

🤩 The most exciting was the market close we hosted with CBOE Canada (one of Canada’s largest stock exchanges) to celebrate our upcoming partnership to raise awareness of new ETF listings (more details to come 🤫)

👏 On top of that, we were also invited to a market open and a market close at the TMX, celebrating two new fund listings!

• 🗼 Evolve ETFs celebrated the launch of $UTES, the Evolve Canadian Utilities Enhanced Yield Index Fund that gives exposure to Canada’s top 10 utility companies.

• 💸 Harvest ETFs celebrated the launch of their High-Income Shares suite, single stock ETFs that offer exposure to core US companies and are overlayed with an active covered call strategy.

🤑 If you want to learn about even more ETFs, make sure you check out the Learn & Earn portal in the Blossom app, where you can earn money to complete lessons created by Harvest, Evolve, and our other ETF partners about their funds!

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Posts this Week

👇 For the featured posts of the week, click to see the full post!

🏆 In case you missed it, I also shared a list of the top 10 bookmarked Blossom posts of all time! Check out that list here.