Why Apple Needs a Wow Moment With Apple Intelligence on September 9

In our comments and video earlier today, we talked about quarterly results from Nvidia NVDA, Salesforce CRM, HP HPQ, and Best Buy BBY were all very supportive of the AI narrative and our shares of Marvell ahead of its earnings report later today. We also discussed the reinforcing comments from HP and Best Buy about the AI-on-PC market that is a tailwind for our position in Qualcomm QCOM.

The company we didn't touch on, however, was Apple AAPL. Let's rectify that and talk about the growing expectations for Apple to feature AI and Apple Intelligence at its upcoming September 9 event dubbed “Glowtime.”

Before we do, let’s set the stage for why this will be important for Apple. One of the concerns we expressed after Apple’s 2024 WWDC event was the lack of real-world applications showcased for Apple Intelligence. We also haven’t seen many as part of Apple’s current beta software testing for iOS, MacOS, iPad OS, and others. We can say this because some of us, including myself, are a part of the Apple Beta program.

From Wow to Want

Looking back at this year's WWDC event when Apple took the wraps off its latest software efforts and Apple intelligence, it's fair to say it was seeding the concept of Apple Intelligence across its developer base. As we’ve moved from the initial beta software releases since then, developers have been exposed to more features that should allow them to ship apps and other offerings that capitalize on Apple Intelligence when the final versions of those software platforms are released.

It stands to reason then that Apple will showcase some of these new software applications at its upcoming event, and if we had to guess, odds are they will be some of the more compelling ones. If Apple can deliver a "wow" factor with these demonstrations, it could stoke the "want" factor and help drive the expected upgrade cycle. Remember, Apple Intelligence will only work with the iPhone 15 Pro models released last year and most likely the Pro models that will be unveiled on September 9.

If Apple keeps Apple Intelligence limited to its higher-priced Pro models, it would be another revenue driver for the company. Estimates put the number of iPhones that have not been upgraded in the last four years at around 300 million, which suggests there is upgrade demand for Apple’s newer devices. For context, across its entire line of iPhones, Apple sold 231-232 million units in 2022.

Zeitgeist of AI

We also should keep in mind that Apple Intelligence will be available across Apple’s Apple Silicon-based products, including Macs and iPads. What this means is there is even more pressure on Apple to deliver the wow on September 9 for its overall product portfolio, but also to put the company back in the zeitgeist of AI. One of Apple’s strengths is the knack it has shown to leverage new technology at its tipping point and package it in an easy-to-use customer experience. September 9 will tell us if it can do it yet again, and our thinking is it will.

Ahead of that event, we’ll be watching out for the August revenue reports from Taiwan Semiconductor TSM and Hon Hai HNHPF, which should show sequential revenue gains as smartphone volumes ramp and data center demand remains strong.

Connecting the dots on all this, a robust iPhone upgrade cycle would support our positions in Qualcomm and Universal Display OLED. Should we see the adoption of Apple Intelligence, it would be another factor that points to AI driving network and carrier infrastructure capacity utilization levels. That would be a nice indicator for Marvell’s non-data center business.

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