How Apple’s iPhone 16 Launch Event Could Affect Its Stock

Ahead of Apple’s highly anticipated event on Monday, where it’s expected to unveil the iPhone 16 supercharged with artificial intelligence (AI), analysts cautioned investors not to set their expectations too high. Historically, Apple’s stock price has tended to underperform the S&P 500 on the day of an iPhone launch event, though others suggested AI enthusiasm could help the stock defy historical patterns.

iPhone Launches Have Historically Been ‘Sell-the-News’ Events

Despite bullish views surrounding the iPhone maker’s AI opportunity, Morgan Stanley analysts indicated the event could potentially send Apple’s stock lower on Monday, though the new devices and AI integration are expected to fuel better performance in the following months.

“Historically, the iPhone launch event has been a sell-the-news event,” the analysts wrote, noting that Apple stock tends to underperform the S&P 500 on the day of iPhone launch events, and “modestly outperform” the market in the following three months.

While bulls believe the AI-supercharged iPhone 16 could kick off a “golden upgrade cycle” for Apple, sending shares higher, Morgan Stanley indicated investors need to “get past” the launch event itself before expecting to see significant AI-related gains.

Could an AI-Supercharged iPhone Break the Cycle?

However, Bank of America analysts suggested this iPhone launch event could be different, given the wildcard AI opportunity.

“If Apple surprises with a compelling demo of Apple Intelligence/third party integrations or with any price increases, we could see the stock fare better than post past events,” the analysts wrote.

Morgan Stanley analysts said while they don’t necessarily expect the market to behave differently in reaction to Apple’s event Monday, they do see “potential for Apple to perform better than historical seasonality into year-end as the introduction of the iPhone 16 and Apple Intelligence helps to unlock pent-up demand.”

Apple shares finished 0.7% higher at $222.38 Thursday, and have gained over 15% from the start of the year.

Overall, the market’s reaction to Apple’s iPhone launch events has typically been a “sell-the-news” event, with the stock underperforming on the day of the event. However, with the introduction of AI in the iPhone 16, there is potential for Apple to break this cycle and perform better than historical seasonality.

Conclusion

As Apple prepares to unveil the highly anticipated iPhone 16 with AI integration, analysts are cautioning investors about setting their expectations too high. Historically, Apple’s stock has underperformed on the day of an iPhone launch event, but there is optimism that the introduction of AI could help the stock defy historical patterns. While some analysts believe the event itself may not have a significant impact on the stock, they see potential for Apple to perform better than historical seasonality in the months following the launch. Investors will be closely watching the event and its impact on Apple’s stock price.

Sources:

• Investopedia