Apple ‘s Worldwide Developer Conference on Monday gave us exactly what we needed — reason to believe iPhone users will upgrade their devices sooner rather than later in order to access a new suite of artificial intelligence features. On Monday, the longtime Club holding unveiled its long-awaited generative AI initiatives, known as Apple Intelligence. But deploying the buzzy new features on Apple’s smartphones will require advanced processors that, for now, are only available on higher-end versions of the iPhone 15 — and, almost assuredly, the latest version to be unveiled later this year. That’s the crucial takeaway for investors. It means that Apple’s new AI tools should be able to boost lagging iPhone sales, which make up roughly half of the company’s overall revenue. In other words, people who are using an older iPhone model won’t be able to take full advantage of Apple Intelligence features such as a revamped Siri, custom emojis called Genmoji, new writing tools and much more. The iPhone 15 Pro and Pro Max, which were released last year, are the only versions of the smartphone currently compatible with Apple Intelligence. Iterations of the iPad and Mac computers that are a few years old also have processors capable of running it. “Apple has likely shortened the average upgrade cycle timeframe with today’s announcement,” Zev Fima, a portfolio analyst for the Investing Club, said Monday. “Even if iPhone 15 users don’t upgrade right away, they now have a very good reason to do it sooner than they otherwise would have. As a result, we would expect earnings estimates for [fiscal year 2025] and [fiscal year 2026] to move higher to reflect the the faster upgrade cycle.” “This, along with the other more incremental updates we received today, give us the confidence to reaffirm our ‘own, don’t trade’ view of the stock,” Fima added. AAPL YTD mountain Apple (AAPL) year-to-date performance A new and improved Siri — one that’s more intuitive and conversational — is a key part of Apple Intelligence, which will be available in beta in the fall. The digital assistant will now be able to answer “thousands of questions” on how to use various Apple devices and its tools can be used across applications, according to Kelsey Peterson, director of machine learning and AI at Apple. For example, users can ask Siri to send an article from Apple News to another contact via iMessage. Apple also announced a partnership with Microsoft -backed startup OpenAI, with Siri able to utilize its ChatGPT for certain tasks, as long as users grant permission. Examples that Apple highlighted Monday include recipes to cook for a dinner party and suggestions for decorating a backyard deck. Taken together, these suite of features show that Siri is getting the makeover that Jim Cramer recently argued would be crucial for an iPhone upgrade cycle to ensue. First introduced in 2011, Siri should be “more versatile” and “can tell you how to do things that she can’t do now.” These enhancements need to take place because “most of the time when I ask Siri to do something hard, she can’t do it,” Jim said recently. “I want that changed.” Apple shares fell 1.9% on Monday after entering the session up more than 19% from their 2024 low on April 19. The stock had gotten off to a rough start to the year, as investors grew concerned about iPhone sales in China, its second-largest market, and questioned the company’s standing in the competitive generative AI race . The slight pullback Monday is hardly representative of the Club’s attitude toward Apple’s slate of AI announcements. We received plenty of reason to be hopeful that an AI-fueled turnaround for the iPhone is on the horizon. Apple typically unveils the latest version of the iPhone at an event in September, with shipments beginning shortly thereafter. That’s when the upgrade cycle should begin. (Jim Cramer’s Charitable Trust is long AAPL and MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Apple CEO Tim Cook speaks during Apple’s annual Worldwide Developers Conference (WDC) in Cupertino, California on June 10, 2024.
Nic Coury | AFP | Getty Images
Apple‘s Worldwide Developer Conference on Monday gave us exactly what we needed — reason to believe iPhone users will upgrade their devices sooner rather than later in order to access a new suite of artificial intelligence features.
