Apple WWDC 2024: Key Insights for Investors

Apple’s Worldwide Developers Conference (WWDC) 2024 is one of the most anticipated events in the tech industry. It’s where Apple(APPL) unveils its latest software and sometimes hardware innovations, setting the stage for the company's future. For investors, understanding the key announcements and trends from WWDC 2024 can provide valuable insights into Apple’s strategic direction and potential growth areas. Here’s a detailed look at what investors should focus on from this year's event.

Insight 1: Apple Unveils AI Skills, But Wall Street Unmoved

During a nearly two-hour speech, Apple CEO Tim Cook and other executives introduced the all-new "Apple Intelligence" technology and explained how Apple integrates artificial intelligence into various applications, including Siri, and introduced OpenAI's chatbot, ChatGPT, to its devices.

Despite the exciting atmosphere of the conference, Wall Street remained indifferent. While the three major indexes of the US stock market collectively rose and most technology giants experienced gains, Apple's stock price fell nearly 2%. Most analysts gave Apple's artificial intelligence strategy a "neither good nor bad" evaluation.

Forrester analyst Dipanjan Chatterjee commented, "Nothing in this conference can push the Apple brand forward as we expect. Apple Intelligence will indeed please users in some meaningful ways, but it only allows Apple to catch up with its peers, not surpass them."

Analysts believe that, unlike other tech giants such as Microsoft, Apple positions its AI functions to serve consumers rather than businesses. This strategy may pose significant promotional challenges, as Apple needs to convince over a billion users, most of whom are not tech enthusiasts, of the necessity of AI technology.

PP Foresight analyst and founder Paulo Pescatore noted, "In this early competition, Alphabet and Microsoft are in a better position after taking preliminary action due to their cloud assets."

Additionally, Apple still relies heavily on iPhone sales. Some analysts expect that the new artificial intelligence functions are unlikely to significantly boost iPhone sales in the short term.

Insight 2: Investors May Misunderstand Apple's Global AI Strategy

Investors were disappointed with Apple's AI strategy revealed at WWDC 2024, but they may not realize the benefits of a slow and steady approach. On the keynote day, Apple’s stock fell nearly 2%, the worst WWDC day performance in over a decade, and dropped another 0.6% in pre-market trading on June 11.

Apple's AI, named Apple Intelligence, will only be available on the iPhone Pro 15 and the upcoming iPhone 16, due to the processing power required. Some investors hoped this exclusivity would drive new phone sales, but analyst Amit Daryanani believes including the iPhone Pro 15 will still spur a "super cycle" in iPhone sales.

Apple has not invested billions in GPUs for AI infrastructure. Instead, it uses its private cloud, powered by Apple-designed silicon chips, to handle high-computing tasks. This integration provides quick, contextual information already stored on users' devices. IDC analyst Francisco Jeronimo highlighted that fewer required applications make AI more efficient and Apple's ecosystem gives it an edge.

Daryanani supports Apple's strategy, confident it can deliver generative AI without massive capital expenditure. Users control when to use ChatGPT and must grant permission before sharing information, enhancing privacy—a cornerstone of Apple’s approach. This privacy focus, combined with on-device processing, appeals to users concerned about data security. Jeronimo noted that AI-supported Apple devices will offer a smoother, more intuitive experience.

In the age of AI, privacy is crucial, and Apple’s strategy positions it well. While it's early days, Apple's AI initiatives could drive positive momentum for the company.

Apple's Future Growth

Apple's future growth is expected to be driven by its investments in generative AI, the continued expansion of its services business, and the potential success of new products like the Vision Pro. Despite current challenges, analysts remain optimistic about Apple's long-term prospects, projecting significant earnings growth and stock price appreciation.