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Assessing Apple Stock Post Apple Intelligence Unveiling

Published 12/06/2024, 18:04
Updated 12/06/2024, 19:10
Assessing Apple Stock Post Apple Intelligence Unveiling

Benzinga - by Zacks, Benzinga Contributor.

Apple (NASDAQ: AAPL) introduced Apple Intelligence, an advanced personal intelligence system seamlessly integrated into iOS 18, iPadOS 18, and macOS Sequoia, at its annual developers' event, Worldwide Developers Conference.

Leveraging the power of generative models, Apple Intelligence aims to enhance user experience across iPhone, iPad, and Mac by combining robust language and image understanding with personal context. This transformative technology, powered by Apple silicon, promises to simplify and accelerate everyday tasks while maintaining Apple's stringent privacy standards.

A cornerstone of Apple Intelligence is its commitment to privacy. Many of its models run on-device, ensuring that user data remains private. For more complex tasks requiring additional computational power, Apple introduced Private Cloud Compute, which extends the privacy and security of Apple devices into the cloud. This system ensures that data is never retained or exposed, with independent experts able to verify the privacy protections in place.

Moreover, Siri, powered by Apple Intelligence, becomes more natural, contextually aware, and capable of handling complex tasks. Users can communicate with Siri using both voice and text, and the assistant can now maintain context across multiple requests. Siri's new design features an elegant glowing light around the screen edge when active, and its functionality extends to providing device support and answering detailed questions about using the iPhone, iPad and Mac.

In a significant enhancement, Apple is integrating ChatGPT into its platforms, allowing users to access its expertise directly within iOS 18, iPadOS 18 and macOS Sequoia. Siri can utilize ChatGPT's capabilities, with user consent, to provide more detailed and accurate information. ChatGPT will also be available in the systemwide Writing Tools, enhancing content creation with advanced language models and image generation.

Enhanced Language Capabilities, Mail Features Apple Intelligence offers groundbreaking features for understanding and creating language. The new systemwide Writing Tools embedded in iOS 18, iPadOS 18, and macOS Sequoia enable users to rewrite, proofread, and summarize text across various applications, including Mail, Notes, Pages, and third-party apps. This innovation ensures that users can effortlessly improve their writing, whether it's for academic notes, professional emails, or creative projects.

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

In the realm of communication, Apple Intelligence enhances the Mail app with features like Priority Messages and Smart Reply, making it easier to manage and respond to emails efficiently.

Priority Messages highlight urgent emails, while Smart Reply offers quick response suggestions. Additionally, notifications are streamlined with Priority Notifications and summaries that display key details right on the Lock Screen, ensuring users stay informed without being overwhelmed.

Advanced Audio and Image Tools The integration of Apple Intelligence extends to audio and image processing as well. Users can record, transcribe and summarize audio in the Notes and Phone apps, providing a valuable tool for capturing and recalling important information from calls and meetings.

Image Playground, a standout feature, enables users to create fun and expressive images using Animation, Illustration, or Sketch styles. This tool is integrated into apps like Messages, Keynote, Freeform, and Pages, enhancing visual communication and creativity.

Genmoji and Enhanced Photo Features Taking personalization to the next level, Apple Intelligence introduces Genmoji, allowing users to create custom emojis based on descriptions or photos of friends and family. This feature brings a new dimension to digital expression, enabling users to share unique and relevant Genmojis in messages and social media.

The Photos app also benefits from Apple Intelligence, with enhanced search capabilities using natural language queries and advanced video search to locate specific moments within clips.

The new Clean Up tool can remove distracting objects from photos, and the Memories feature allows users to create personalized storylines by simply typing descriptions, with Apple Intelligence curating the best photos and videos to match.

Conclusion Apple has been playing catch-up in the AI space compared with Alphabet (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN), its peers in the "magnificent seven" group. Following the launch of Apple Intelligence, its competitive position is expected to improve.

Apple shares have underperformed Alphabet, Microsoft and Amazon year to date. While Apple has returned 5.1%, shares of Alphabet, Microsoft and Amazon gained 41.6%, 29% and 47.8%, respectively.

However, Apple's near-term prospects remain foggy due to sluggish China sales amid stiff competition. It expects the June quarter's (third-quarter fiscal 2024) revenues to grow low-single-digit year over year. Unfavorable forex is expected to hurt revenues by 2.5%.

The Zacks Consensus Estimate for revenues is currently pegged at $83.07 billion, indicating 1.55% year-over-year growth. The consensus mark for earnings has remained unchanged at $1.33 per share over the past 30 days.

Investors should wait for a better entry point for Apple, which currently has a Zacks Rank #3 (Hold), given the modest growth prospect in the near term.

Moreover, Apple is trading at a premium with a forward 12-month P/E of 27.54X compared with the Zacks Computer-Mini industry's 26.86X and higher than the median of 27.37X, reflecting a stretched valuation.

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Read the original article on Benzinga

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