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Apple's AI plan may not drive up iPhone sales in this cycle

Apple (AAPL) announced new AI technology at its Worldwide Developers Conference (WWDC) that will be implemented into its iPhones and other personal devices. While Apple has struggled with iPhone sales in recent history — especially in China's consumer market — could this new tech help improve sales?

Needham & Co. Senior Media & Internet Analyst Laura Martin joins Catalysts to give insight into why she believes it's too early to tell if this announcement will truly change anything for Apple from a sales perspective.

"I do not think that will play out in the current iPhone [16] that gets launched in September, especially because you saw today the headline was that Apple needs a large language model in China because China doesn't allow any of the large language models that are sitting in America to be used," Martin claims. "So none of the gen. AI [generative AI] stuff they announced are represented are allowed in China and that's 20% of iPhone sales. So I think this cycle is too early. So we think actually estimates will not exceed Wall Street consensus this year."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

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This post was written by Nicholas Jacobino

Check out more of Yahoo Finance's latest coverage of Apple, its AI tech showcased at last week's WWDC 2024 event, and more:

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Video transcript

Other company that I know you cover is Apple Laura right before this recent rally that Apple had, they had just broken above the flat line for their year to date performance.

Now they're up about 14% year to date.

I'm curious from your perspective, is the post worldwide developers conference growth real or does it start to fade particularly after we get the upcoming quarterly earnings from Apple?

Right?

So I mean, the the reason that the market is saying that they think the generative A I announcements that Apple has made um will actually drive faster iphone sales that are in any of our Wall Street consensus estimates.

So I think I think they are too early.

I I do not think that will play out in the current iphone that gets launched in September.

Um especially because you saw today, the headline was that Apple needs a large language model in China because China doesn't allow any of the large language models that are seen in America to be used.

So none of the gen A I stuff they announced are represent, are allowed in China and that's 20% of iphone sales.

So um I think this cycle is too early.

So we think actually estimates will not exceed Wall Street consensus this year.

But next September, we do think a lot of developers will integrate the gen A I capabilities Apple is talking about.

So the next cycle after this one, uh we do think is probably our estimates are too low, but I'm not as optimistic as the market today is about the the the September of 2024 iphone cycle.

Well, it was interesting because initially after the conference, there was kind of a tepid wall street reaction on Apple.

And then the next day after we got some commentary from folks in the space, it seemed like there was this sudden rally around all of the announcements that they made.

I mean, I'm just curious, what did you think of the announcements?

Did they pass the sniff test for you?

You know, I think it just so first of all, Apple as you know, has $100 billion share buyback.

And so my guess is there in the market supporting the shares here?

That would be my guess.

Um And then secondly, I think it just all come, it's just all a judgment and people are trading on how important, how big iphone sales will be because that's 50% of the revenue still um this September and it's my judgment that gen A I won't be as big a deal this year, but the market disagrees with me.

They think that this, these gen A I announcements are gonna drive iphone sales, this September and October.

Well, that's what makes conversations with people like you fun, Laura.

So we appreciate you having an interesting take.