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Apple (AAPL) stock could be in for even more turbulence after enduring a quick correction in August. Wednesday's 3.5% single-day plunge on the back of the Chinese government's iPhone ban for government workers - compounded by today's ongoing weakness - has effectively dashed any hopes for a near-term breakout.
That said, let's not discount the potential for Apple's upcoming iPhone showcase to delight investors, even as the market tides look to turn against big tech. Apple's "Wonderlust" event is on tap for next Tuesday, Sept. 12, and the curtain is expected to be pulled back on a handful of new hardware.
Now, there's no question that consumer spending has hit a bit of a snag of late, due in large part to persistent inflationary pressures. Many consumer goods firms - Apple included - have seen their sales slump in recent quarters. That said, the macro headwinds hitting consumers are less of an Apple problem and more of an issue for everyone else.
At the end of the day, Apple offers must-have products through the eyes of its fans. Apple products may well be discretionary (nice-to-have) goods in the strictest sense; however, truly impressive Apple hardware is viewed as more of a staple by its loyal customer base.
Even if the economy isn't firing on all cylinders, financing and trade-in are just some of the options its cash-strapped consumers may consider as they look to upgrade. I believe Apple's recent sales failed to impress Wall Street because of a lack of hot new releases to entice buyers. Indeed, Apple needs a refresher on its slate of products.
Apple's Coming Event, iPhone 15 Reveal Could Heat up the Stock
Come Sept. 12, a handful of new products may kick off the start of a sales re-acceleration. Led by the iPhone 15, Apple's coming refresh cycle could be what the stock needs to break out to a new all-time high. Undoubtedly, a considerable amount of aging iPhones out there require a good upgrade. Though the next iPhone iteration may not mark the biggest leap forward in terms of tech or design, I think the value proposition may be enough to convince users to make the jump.
Amid inflation and macro headwinds, people are hungry for great deals. That's a major reason why off-price retailer TJX (TJX) has been doing incredibly well over the past year. The company may sell discretionary goods, but it sells them at a pretty enticing price point.
Who couldn't use a bargain as the price of everything continues to surge?
Now, Apple has a lot of pricing power. The next iPhone is expected to have a "major price hike." According to analyst Jeff Pu, the iPhone 15 Pro model could start at $1,099. Still, Apple could more than justify the price increase on its highest-end models.
How?
Well, how about a new periscope lens that could allow for optical zoom in the range of 5-6x? That's quite the camera upgrade. Of course, Apple isn't the first smartphone maker to include a lens capable of such impressive optical zoom. However, I'd bet that Apple's spin on such a lens could lead to a camera that's head and shoulders above its peers.
Remember, it's not just the hardware specs that matter. Perfecting the software behind the hardware is what has made Apple so great. In that regard, I do think the next iPhone's camera upgrade may be significant enough for many to justify the upgrade, even amid turbulent economic tides.
A Sizeable Hardware Leap Ahead
While the upgrade from iPhone 14 Pro to iPhone 15 Pro may not be the largest, I think it's hard to argue that the hardware capability leap is one of the most sizeable in recent memory.
It's not just the periscope camera, either. The iPhone 15 Pro's latest chip (likely the A17) is expected to build on the 3nm process. It's also rumored to sport a six-core GPU. It's hard to tell how far ahead of the competition Apple will be as it unveils the A17. However, I do think Apple's latest chip could take a lot of spotlight away from the Huawei Mate 60 Pro and its humble 7nm processor.
Looking past the September event, Apple may be able to deliver significant refreshes to the iPad and Apple Watch.
Going into next year, the iPad could be in for one of its biggest upgrades in years. Such an upgrade could give the iPad segment a shot in the arm after its latest quarterly disappointment. Apple reported $5.79 billion in iPad sales during the latest quarter, short of analyst expectations for $6.41 billion.
Further, Apple is rumored to have a new design for Apple Watch X, a product that could launch as soon as next year. Little is known about what the Watch could feature, but I think it's safe to say the firm will have something big in store for the product's 10th anniversary.
The Bottom Line
Apple's events don't tend to ignite investor enthusiasm. Not even the Apple Vision Pro reveal was impressive enough to give Apple stock a jolt. Still, Apple's next product cycle is promising, even though it may lack the "awe" factor from this year's WWDC.
Apple is a consumer products company that knows what its users want. While the iPhone 15 line is expected to be pricier than its predecessor, look for Apple to justify the higher price tag with features such as the new camera and the A17 chip. Given how impressive Apple's latest hardware capabilities could be, one could argue that an even higher price tag may be justified for the iPhone 15 Pro - as well as Apple's stock.
On the date of publication, Joey Frenette had a position in: AAPL . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
