Warren Buffett’s Berkshire Hathaway (NYSE:BRK-B) may have offloaded a massive chunk of Apple (NASDAQ:AAPL) stock this year. Still, there are plenty of reasons to hang on as the Oracle of Omaha books profits, likely for tax purposes and to reduce overconcentration risks.

Undoubtedly, Apple stock is seemingly expensive from a historical standpoint, with shares currently trading at just under 35 times trailing price-to-earnings (P/E). The premium is largely attributed to the looming launch of iOS 18.1 — the update that includes Apple Intelligence — which will set the tone for the new year.

Key Points About This Article

• Apple stock seems stuck below its all-time high, but a breakout may not be too far off.
• The early iPhone 16 sales data is overblown. The real test comes once the AI-powered iOS 18.1 graduates from beta.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

iPhone 16: Off to a Slow Start. Look for iOS 18.1 to Help it Pick up the Pace.

The iPhone 16 launch itself has been met with shrugs. Some Wall Street pundits are not impressed with the phone’s debt. UBS analyst David Vogt recently pointed out that wait times for the high-end device (the Pro line) fall short of the prior two releases. Though some may be concerned following the iPhone 16’s first week on the market, others, like Wedbush Securities’ Dan Ives, aren’t ready to stop pounding the table.

Ives views iPhone 16 sales as a “bullish start” for the stock. That’s quite a contrarian take from the long-time Apple bull. Notably, Ives, who has a $300 price target on AAPL stock, thinks that the December quarter will see the device sell “high single digits” or even “likely double digits.”

I think Ives is right on the money. Investors should wait until iOS 18.1 is finally released and customers can try the new software in stores. Reportedly, the big update could land in the U.S. in late October, potentially a week before Halloween. The rest of the world must wait a couple of weeks longer.

I think Apple should have delayed its iPhone launch by two months or more so that it could have Apple Intelligence ready out of the box.

There’s No Reason to Rush Into an Upgrade, at Least Until Apple Intelligence Reviews Land.

Sure, many eager Apple fans lined up on day one to get their hands on the latest iPhone. That said, it’s hard not to imagine many other users patiently waiting for the big software update so that they can try before they fork over $1,399 or more on a new device.

Indeed, paying a hefty sum upfront for a main attraction that isn’t yet here may not sit well with some. And it’s really hard to blame consumers waiting for the software to catch up with the hardware. The real test for Apple, I think, will be how device sales fare once iOS 18.1 goes live.

Apart from a new camera (and button), the new iPhone 16 isn’t all too jaw-dropping of a hardware update. However, if you’re hanging onto a device that will not support Apple Intelligence (anything older than last year’s iPhone 15), it makes sense to go for the 16 or even last year’s 15 if you’re looking to save some dough while still getting a seat to Apple’s AI debut.

Forget the First Week of iPhone 16 Sales. The Final Quarter Will Tell Whether There Will Be a Supercycle

For now, Apple Intelligence is in beta, and the full smarts of the updated Siri won’t be fully understood until iOS 18.1 is here. Indeed, the 18.1 update is bound to be the biggest and most profound one in iPhone history.

Adding ChatGPT into the Apple ecosystem would surely help jolt sales, given the profound ascent the large language model (LLM) enjoyed since it singlehandedly kicked off the AI frenzy. However, it’s what Apple adds on top of ChatGPT (the personalized experience) that could dictate whether the “upgrade supercycle” we’ve all heard of materializes.

Though AI is on every AAPL shareholder’s mind these days, I still think the skeptics will be proven wrong to push out the supercycle to next year. I think the supercycle begins once iOS 18.1 lands.

As it stands, iOS 18, which lacks Apple Intelligence, is already a solid update even without the boldest and brightest AI features. If Apple Intelligence is the revolutionary update AI enthusiasts have been waiting for, Apple users and investors could be in for a real treat before the year ends.

However, whether such a supercycle entices Warren Buffett to buy back some of the stock he sold in the first quarter remains to be seen.

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