Apple (NASDAQ:AAPL) starts its Worldwide Developer Conference on June 10. Investors should expect volatility in Apple stock.
It will be the most important Apple event in years. It has been 18 months since the launch of ChatGPT, and five months since Microsoft (NASDAQ:MSFT) passed Apple in market cap.
The reason for the bad stock performance is clear. It’s Apple’s lack of a clearly defined AI vision. The WWDC is expected to deliver the vision, and a strategy for getting there.
You might even call this event the Apple AI-WWDC.
WWDC and Apple Stock
The centerpiece of the conference will occur at 1 p.m. Eastern on June 10. This is the Keynote Address, streamed on Apple’s cloud, where the show’s vision, and new software technology, will be summarized.
The second market-moving event will be a Platforms State of the Union, taking place at 4 p.m. as the market closes. This will provide more granular detail around the announcements and give after-hours traders a second shot at speculation.
The announcements around the WWDC won’t settle anything. Instead, they will set down markers, a strategic direction, and offer enabling software for developers to build around.
Besides previewing new versions of its operating systems, Apple is expected to focus on Siri, its voice interface. The aim is to make Siri more of a voice assistant, replacing the screen and tap interface users now expect. Apple will also likely launch an AI App store.
Apple has been designing its own chips for years, so expect the latest version, dubbed the A18, capable of handling many AI tasks without needing the cloud.
Market Reaction
While you can expect short-term volatility around WWDC, it may not have lasting value.
Over the last 10 years, Apple stock has been down an average of 1% a week after the event, but up 12.3% three months out. That’s because the second market-moving event on the Apple calendar, its new iPhone launch, comes in September.
Things may be different this year, says Dan Ives of Wedbush, who has replaced Cathie Woods as the market’s primary tech whisperer. He recently raised his price target on Apple to $275.
Who Apple partners with on AI will drive the action. It could be OpenAI, or it could be Microsoft. It could be Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), or it could be no one. The leverage Apple’s clients can give to favored AI models will move the market.
Where’s The AI?
Apple remains defined by the iPhone. Wearables like the Watch, the HomePod, and the VisionPro add just 10% to the total. Services are just 20% of the business, but it’s the most profitable piece of it.
Whether Apple can move the needle here will be defined by its WWDC announcements. All these other devices can be interfaces for AI applications. The Vision Pro launch has been especially disappointing.
I expect this to change, and I expect this change to provide a big boost to shareholders. The Watch and HomePod are both Siri interfaces, the Vision Pro a new type of visual interface. They’re years ahead of the AI launch and just waiting for the “killer app” needed for success.
The Bottom Line
The AI era is where clouds were in 2011, where the Web itself was in 1996. We are just getting started.
I bought more Apple stock recently because its “failed” hardware can do more to define the coming era than anything else I’ve seen.
AI will consist of clouds acting as servers for a variety of clients. The Cloud Czars have been working on these clients for a decade, without success.
Consider Google Glass, Amazon.com’s (NASDAQ:AMZN) Alexa, or Meta Platform’s (NASDAQ:META) Quest. All have lacked compelling applications. They have all been ahead of their time.
Their time is now. The WWDC will show them the way to your home.
As of this writing, Dana Blankenhorn had a LONG position in AAPL, MSFT, and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
