apple (Nasdaq:AAPL) has been soaring recently. Apple stock is not only back to the $200 per share level, but it’s also on its way to hitting new all-time highs. As you’re probably already aware, the tech giant’s recent bullish wave is entirely tied to the company’s plans to capitalize on the growing trend in generative artificial intelligence.
But while the current “AI mania” frenzy may not die down anytime soon, a key issue that has been on the back burner may eventually come to the forefront again — and we’re of course talking about headwinds in demand for the company’s flagship product, the iPhone.
AAPL may be at risk of reversal if concerns resurface that AI won’t be a “silver bullet” for iPhone sales. So, if you’re thinking about buying, selling, or holding, here are some things to keep in mind:
Apple Stock, AI Rise, and Correction Risk
It’s been nearly a month since Apple made its big AI announcement at its 2024 Worldwide Developers Conference in early June, where the tech giant unveiled plans to integrate its “Apple Intelligence” generation AI platform across its various apps, products, and operating system.
Apple also announced that OpenAI’s ChatGPT will be available on Apple platforms later this year. Investors were buying Apple shares at high prices before the event, but after the event, a “buy on rumors, buy on news” scenario took shape.
As mentioned above, AAPL resurfaced above the $200 per share mark in the wake of WWDC, and in the weeks since, the stock has continued to hit new highs.
Still, it’s too early to conclude that the stock is set in stone. As with other “Magnificent Seven” components, there’s a lot of potential for AI to transform Apple’s business.
However, the key issues that drove AAPL lower from January to April are not completely gone, and the coming months could bring renewed attention to the negative aspects of Apple, bringing the “AI rally” to an end. A correction may then occur.
Why FUD may soon be back
The WWDC AI event may have given the market another reason to be bullish on Apple stock, but the aforementioned iPhone demand issues are still lurking just below the surface, with sales and market share continuing to decline, especially in China, as UBS analyst David Vogt recently pointed out.
To make matters worse, according to Vogt’s calculations, the iPhone’s popularity is not only declining in high-growth markets like China and India: Recent declines suggest the iPhone is losing market share in the United States as well.
Indeed, one could argue that this issue could be eliminated entirely if the integration of gen AI with ChatGPT sparks new demand for iPhones.
But whether this will come to fruition is far from certain — after all, one of Apple’s main competitors in the global smartphone market has already got a head start, launching an AI-enabled phone earlier this year.
As we’ve noted in previous Apple articles, AI may not solve the company’s demand problems in China.
Why? It’s not certain, but the US federal government’s crackdown on AI software exports to China could extend to Apple’s upcoming mobile AI products.
Only time will tell, but if Apple sees only disappointing improvements in iPhone sales due to the adoption of AI in the coming quarters, fears, uncertainty and doubts about future growth could rear their heads again.
Conclusion: Sell now, buy again later.
Don’t get me wrong, AAPL isn’t going to plummet to $150, $125 or even lower per share, but a gradual decline is possible if early results from Apple’s AI efforts don’t live up to expectations.
For example, if this were to come to fruition, AAPL could fall to its 52-week low of $164.08 per share, so now is a good time to take profits while the stock is well above $220 per share.
From there, you can sit on the sidelines and watch as the Apple AI situation develops, and if appropriate, re-enter your Apple stock position at a more favorable price, aiming to “bite into AAPL” once again.
Apple stock receives a C rating from Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace research staff primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
