Apple’s September 9 launch is shaping up to be a major test of its next phase of growth, with investors looking for a new generation of hardware and a stronger artificial intelligence offering to justify the company’s rising valuation.
The event is expected to feature Apple’s first foldable iPhone, the full rollout of Siri AI and a broader push into smart-home devices. It will also be the company’s first launch under Chief Executive John Ternus, who succeeded Tim Cook last week.
According to Josh Gilbert, Lead Market Analyst at etoro, the combination of new leadership and a potentially significant product upgrade gives this year’s event added weight. However, with Apple shares already up 21% this year and trading at approximately 35 times forward earnings, expectations leave little room for disappointment.
A new iPhone with much to prove
The foldable iPhone is expected to attract particular attention as Apple looks to bring renewed momentum to its largest revenue source. The iPhone generated USD 210 billion of the company’s USD 416 billion in revenue in its last financial year, accounting for just over half of the total.
“The foldable iPhone is the one to watch. Launching a foldable device at a premium price will test whether Apple can still convince consumers to pay more for a genuinely new iPhone,” Gilbert said.
The launch could also offer an early indication of the direction Ternus intends to take. Apple’s reported product pipeline includes AirPods with cameras, smart glasses, a tabletop home robot and a touchscreen MacBook, pointing to a wider effort to expand its hardware portfolio.
“If Cook’s decade was defined by services, Ternus’s tenure looks set to focus more heavily on devices,” Gilbert said. “The strategy appears to be centred on bringing more Apple products into more rooms, which may explain why the board chose a hardware engineer to lead the company rather than an executive primarily associated with AI.”
Siri AI brings opportunity and questions over returns
Alongside hardware, investors will be watching whether the rollout of Siri AI can strengthen Apple’s position against competing AI platforms and rebuild confidence in its digital assistant.
“Apple is expected to deploy Siri AI at scale this month as a more direct competitor to leading chatbots. The longer-term ambition could be to charge for the service or generate revenue through third-party applications integrated into the platform,” Gilbert said.
The commercial model will be an important part of that assessment. A subscription could create a new revenue stream, while a free service would initially leave Apple absorbing the significant operating costs without direct income from users.
“This will be closely watched by the market because Siri has spent the past decade developing a reputation for not always doing what users ask,” Gilbert said. “One of the key questions is whether the upgraded assistant will launch with a subscription fee or remain free.”
Despite frustration over Apple’s progress in AI, Gilbert cautioned against dismissing its ability to compete.
“Investors have not been impressed by Apple’s limited progress in AI over recent years. However, the company has been written off for arriving late to major technology trends many times before, and those calls have usually proven premature.”
A high bar for the market
Previous iPhone launches suggest that product excitement does not always translate into share-price gains. In four of the last five September iPhone events, Apple shares fell during the two weeks before the launch. In three of those cases, the declines continued afterwards.
This year, new leadership and the prospect of Apple’s first foldable iPhone could give investors more to assess than a routine upgrade. Even so, the stock’s recent rally means the company will need to deliver against substantial expectations.
“This year feels slightly different, with a new CEO and the prospect of a genuinely new product rather than another incremental upgrade. However, Apple shares have already rallied 21% this year and are trading at approximately 35 times forward earnings, leaving little room for disappointment,” Gilbert said.
“Investors will be hoping the event delivers enough substance to avoid another case of buying the rumour and selling the news.”
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