Apple Intelligence Underwhelms But Trade-Ins Could Spark Upgrade Cycle

Apple AAPL has concluded its “Glowtime” event and, as expected, the company unveiled the latest models for Apple Watch, AirPods and iPhone. As we’ve come to expect, there were many technical upgrades for each product line, but reports that pointed to a staged debut of Apple Intelligence were correct.

Initial capabilities are launching with the new iPhone models when they hit shelves on September 20, 2024, but the resonating message is that there is “much more to come.” Some of that will be later this year, with some pushed out into 2025.

For those who were hoping to see Apple Intelligence foster in a massive upgrade cycle, I would have to say that most folks will be more underwhelmed than not. To counter that, however, Apple and its carrier partners announced major trade-in offers with as much as $800 for an iPhone 12 or newer and as much as $1,000 for an iPhone 12 Pro or newer.

These trade-ins have the potential to spark that upgrade cycle because they help reduce the cost of new device ownership, especially with iPhone 16 starting at $799 for base models and iPhone 16 Pro at $999 for the same. In our view, that was the standout item from the Apple event, and it’s likely to buy Apple time and foster new iPhone sales as it brings the next stages of Apple Intelligence to market in upcoming iOS 18 releases. It should also help seed the addressable market for Apple Intelligence and corresponding subscription service offerings.

All in all, we would characterize the event as a good one but if the question was, were we wowed by Apple Intelligence, the answer would be “not really.”

Apple shares are down modestly following the event, but by this time tomorrow, we’ll be able to gauge Wall Street’s reaction and those implications. We would be surprised if the thoughts that we shared above weren’t the consensus view. In terms of the shares, the trade-in offers are likely to buoy any major negative Apple Intelligence reactions, and that should limit movement to the downside.

We’ll continue to keep an eye on the $205 to $206 level as an area of potential opportunity, but we will also be keeping an eye on carrier comments and the supply chain to gauge if the trade-in offers are spurring even stronger than expected iPhone demand. If they are, that would be a nice catalyst for not only Apple shares but for those of Qualcomm QCOM and Universal Display OLED.

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At the time of publication, TheStreet Pro Portfolio was long AAPL, QCOM and OLED.