China Could Hurt Apple Investors

Doug McIntyre and Lee Jackson discuss the recent all-time high of Apple’s (NASDAQ: AAPL) stock and the bold price targets set by analysts, including one at $300. They highlight upcoming key events: earnings on August 1st and the launch of the iPhone 16 in September, noting that any perceived weakness could significantly impact the stock. Concerns about the effectiveness of AI integration into the new iPhone and the potential variability in demand, particularly in China, are discussed. They also mention the competition Apple faces from other major smartphone brands like Samsung, Oppo, and Vivo.

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Transcript:

So Apple hit an all-time high.

Yep. Two analysts, one from Luke, one from Morgan Stanley on their buy lists.

Target on one was $300, you know, which is crazy. An 18% move up from where it is right now.

And I mean, you’re at an all-time high. And somebody says, it’s got 18% to run, which is, to me, it’s crazy.

So when I look at Apple, I look at two events. August 1st, right around the corner, earnings. September 10th, 11th, 12th.

I found 16. What worries me is that if either of those is weak in any way, if the perception of the market is that either of those is weak, it’ll hammer the stock.

I don’t like that. If it’s one event, it’s like, okay, I can watch one thing. When you’ve got two events, it worries me.

Well, and again, the folding AI into the phone, I mean, how advanced will that really be?

Because it remains to be seen, of course. And again, iPhone demand, a lot of it will rest on China.

I don’t think that, I think the demand here could be less than they expect, at least domestically.

Well, Apple has a division when they look at the geography of the world called Greater China.

And Greater China got the hell beat out of it the last reported quarter based on at least anecdotal information that comes from places like CounterPoint who go into a market and count phone sales.

Apple’s improved in iPhone sales in China since the start of the year.

They have, yeah. But there’s no Babe Ruth home runs there.

No, not given the competition and the mere fact that, you know, the Chinese are always encouraged to buy Chinese product if possible by their overlords.

So, yeah, you’re right that if either one of those fails, especially if one fails in a big way, look out.

The other thing I don’t think the American investor looks at and understands is that Samsung, which very often is the top selling smartphone in the world.

And, you know, Chinese companies like Oppo and Vivo, they have their own AI products.

It’s like people say, oh, my God, Apple’s coming out with this AI powered iPhone 16. No one else will have it.

The fact of the matter is, is that everybody’s going to have it.

Yep. And it’ll all rest upon, well, what phone does more?

And how are you tapping AI into your phone usage and to what your phone can do?

And I think it’s at kind of an early point, and it’ll be interesting to see just exactly how they do make the application work.

Now, August 1st, when earnings come out, I’m looking for three things.

The first one is, does revenue go up year over year? They’ve had some real problems with that recently.

It would be nice if that happens, even if it’s 1% or 2%. It means that you’re seeing a trend reversal.

The second thing is Greater China. That’s easy. You just go into the PDF that they attach and you just read it across and see how they’re doing.

But the other one is the iPhone 15 is long in the tooth.

So do they get a burst of sales with the iPhone 15 very late in its lifecycle, or has that caused a big enough problem so you see iPhone revenue drop as it did in the quarter that they announced two and a half months ago?

Well, iPhone 15 sales as a whole were disappointing, as I recall.

But what I have seen is they’re using it with the carriers as kind of a pigeon for the carriers to say, hey, switch to Verizon and get a free iPhone 15.

And not the kind where you buy one, get one free, but where you actually, I think, get one free.

You know, kind of like the old days. And The iPhone 16 has to be a blockbuster.

It really does. And if they go over the top in pricing, I think that could punish them as well.

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