Apple (AAPL) will host its annual iPhone launch event on Monday, September 9, at its headquarters in Cupertino, California.
CEO Tim Cook is expected to headline the keynote, which will reportedly unveil the iPhone 16 lineup, the 10th anniversary edition of the Apple Watch and updated AirPods.
That’s a lot of hardware, but Wall Street isn’t counting on new iPhones or special edition Apple Watches to boost the company’s stock price. Instead, all eyes will be on Apple’s generative, AI-powered Apple Intelligence platform.
Apple Intelligence is the company’s big move to bring generative AI capabilities to consumers’ iPhones, iPads and Macs. Wall Street wasn’t too thrilled with how long it took Apple to announce its AI initiative, and waited impatiently as Microsoft (MSFT) and Google (GOOG, GOOGL) unveiled their own AI services for businesses and consumers.
But investors changed their minds when Apple unveiled Apple Intelligence at its WWDC developer conference in June, driving the company’s stock price up about 15% and putting it ahead of Microsoft, Amazon, Tesla and Google in year-to-date performance.
Apple is making Apple Intelligence a key selling point for its latest phones, as the software only runs on last year’s iPhone 15 Pro or newer phones. And analysts are betting that this exclusivity will boost iPhone sales.
“Apple Intelligence remains key to meeting pent-up iPhone demand and accelerating the replacement cycle, and we expect Apple’s … event to focus on AI integration of the new iPhone 16,” Morgan Stanley analyst Erik Woodring wrote in an investor note.
But Apple Intelligence could prove more important than just a catalyst for iPhone sales. In the eyes of consumers, it will also be a defining moment for generative AI.
Apple’s AI opportunity
A look at Apple’s invitation for the September 9 show shows that the company is going all-in on AI. From the tagline “It’s Glowtime” to the multi-colored Apple logo meant to evoke Siri’s revamped look, the company is sending the message that this show will be an AI show.
Apple is integrating artificial intelligence into its software products with features that summarize text message threads, display high-priority emails in the Mail app, provide an improved Siri experience, and enable access to OpenAI’s ChatGPT.
Apple is also integrating AI essentials like writing tools that help you spruce up your emails and documents by proofreading your text or revising it to make it sound more professional or concise. The company also expects developers to jump on the AI bandwagon and create new apps that use the technology on Apple devices.
“We expect this could lead to high-margin incremental service growth of $10 billion annually for Apple if this all pans out and will be the start of a new multi-faceted AI revenue stream that is both hardware and software driven,” Wedbush analyst Dan Ives wrote in a note to investors.
“We believe the introduction of AI technology into the Apple ecosystem will bring monetization opportunities in both services and iPhone/hardware,” Ives added, adding that the company’s stock could increase by $30 to $40 per share – pushing the company’s market capitalization to the $4 trillion mark.
Apple isn’t the only company bringing generative AI to its smartphone lineup. Samsung has Galaxy AI software that combines its own AI with some of Google’s AI intelligence. Google also offers its own Gemini AI platform through its new Pixel 9 lineup of devices, including its Pixel 9 Pro Fold foldable phone.
However, Apple has done a far better job of explaining its AI offerings than its competitors. At its developer conference in June, Apple made the software seem like a must-have for users and explained how it would integrate with the company’s various apps and services. Samsung and Google have made the AI more personal, but they have failed to do so.
The AI risk
But Apple still needs to do more to get people excited about its AI efforts. I’ve been using Apple’s beta software on my iPhone 15 Pro Max, and while I appreciate the ability to summarize long text message threads between friends — no one wants to dig through 40 messages to figure out what they’re making for dinner — and find the priority email feature in Mail helpful, it’s hard to say whether that’s enough to get consumers interested in the technology.
Apple must also take great care to ensure that Apple Intelligence software is accurate and not prone to hallucinations, the kind that have led to criticism of AI software such as Google’s AI Overview, which, for example, asked people to mix glue on their pizza or eat rocks.
Most importantly, Apple needs to make sure that Apple Intelligence is something consumers actually want to use and isn’t just a feature the company had to squeeze into its portfolio to appease investors who fear Apple might miss the next tech hype train.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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