5 Reasons Apple's New Phone Moves the Needle: 5 That It Won't

Key Points

• Apple's iPhone 15 event brought several new updates that could move the needle this year. 
• Each positive has a negative to offset the good news, so downside risk is also present. 
• The analysts could tip the scale, but they aren't that impressed so far. 

Apple's NASDAQ: AAPL iPhone 15 event has come and passed, leaving the market with several updates to ponder. The event included updates to the iPhone, the Watch, Airbuds, and other Apple products and should help drive the next upgrade cycle. The question is if the coming cycle will be enough to move the needle and drive the stock to a new high. As good as the event was, there are reasons to believe the stock will head lower before it moves higher again. 

Apple Looks to Emerging Markets for Growth

Among the many updates to the iPhone 15 is an increase in prices for critical markets. The iPhone 15 price will remain the same as the iPhone 14 price for U.S. customers, but those in China, Japan, and India face price hikes. The two critical focus areas are China and India, which account for the lion's share of emerging market GDP and growth. For most models, prices for base versions are the same as last year, but customers will pay higher prices for memory upgrades and the most-premium phones, such as the iPhone 15 Pro Max. 

This shift is notable given the outlook for emerging market growth over the next few years. Emerging markets are expected to double the GDP of their developed counterparts at least, and nations like India will more than double by 2030. India is driven by a rapidly improving consumer outlook and a growing number of high-end shoppers.

Meanwhile, US markets are expected to grow, but there is an increasing risk of inflation and FOMC interest rate hikes to pressure consumers.

Apple Updates the iPhone to USB-C Charging 

The update with the most positive response is the update to USB-C charging. The update ends Apple's long run with the Lightning cable and provides universal charging across Apple devices. Now, there is no more keeping track of numerous cables and various charging cubes; all can be charged with a single cable. It sounds like a good move and could help drive the upgrade cycle, but there is a downside. Apple was already moving in that direction because of an EU mandate setting USB-C as a standard for 2024; the takeaway is that this good news was expected and already priced into the market. 

Apple's New Chip Not Focused on AI Applications

Apple's chips and products include multiple forms of AI, and there are enhancements to their newest chip, but there is a catch. The GPUs in the new iPhone are focused on gaming rather than AI applications, which is a telling indicator of where the technology stands. When AI applications become the focus of Apple chips, it will be a sign the next wave of AI is upon us.

Until then, games sell iPhones in this regard and will continue to support the market. Apple's primary play on AI is the Neural Engine. It is a machine-learning, energy-efficient component of Apple's chips. The Neural Engine is based on the transformer model aiding iPhone functions. 

The Analysts Yawn, Nothing to See Here Folks

The analysts were not impressed enough with Apple's new lineup to take the time and revise their targets. The single analyst update to show up on Marketbeat's tracking tools is a reiterated Neutral rating with a price target aligned with the all-time high. The trend in sentiment is just as neutral and includes several lowered price targets and a few downgrades over the past 3 months.

The consensus price also aligns with the all-time high and has stopped trending higher. Consensus has been flat over the last month and may not move higher without a solid earnings report for Q3. As it is, the analysts expect revenue to be flat compared to the previous year and for modest margin expansion. 

Apple Price Action is Topping 

The charts are among the more telling signs the iPhone 15 event will not move the needle for shareholders now. The market for Apple stock hit a top in July and then confirmed resistance at a lower level in August that is still in play. The iPhone 15 event did not catalyze a rally and left the market lower at the end of the day. This market is on the brink of moving below the 150-day EMA, which could result in another 10% to 15% decline.