Since early last year, one of the driving forces behind the market rally has been the rapid and continuing adoption of artificial intelligence (AI) . Indeed, many of this year's best-performing stocks have AI in common.
One company that's been curiously left out of the conversation is Apple (NASDAQ: AAPL) . While other tech giants made a big splash about their plans to adopt and integrate generative AI, Apple was strangely silent. That is, until recently.
In early June, the company introduced Apple Intelligence, a suite of generative AI tools for the iPhone, iPad, and Mac computer. The company noted that Apple Intelligence will be "deeply integrated" in the upcoming versions of its popular operating systems. Apple was also quick to point out that these tools will come with the company's legendary focus on privacy.
Apple has scheduled its next new product release for Monday, Sept. 9, with all eyes on the expected launch of iPhone 16. That said, investors will also be watching closely to see what details the company provides about its AI functionality. Many expect the company to make a big splash, which begs the question: Should investors buy Apple stock before the big event?
Here are five reasons Apple stock is a smart buy before Sept. 9.
Image source: Apple.
1. History is on your side
Apple has a long track record of debuting the upcoming version of its flagship iPhone at a September event, with the new devices shipping just weeks later. As a result, there's plenty of data to suggest how the stock will react on the heel's of the company's big reveal.
The data reveals that in the six months following a new iPhone release, the stock has gained more than 12%, on average, according to Dow Jones Market Data (via Barron's).
2. Growth returns to the smartphone market
Macroeconomic headwinds of the past couple of years have stunted sales of smartphones. The market slipped in 2023, with global smartphone shipments down 3.2% in 2023, according to market intelligence firm IDC. That isn't surprising, given that inflation was stubbornly perched at 20-year highs.
However, with inflation cooling, consumers have more discretionary income, which is boosting smartphone sales. Just this week, IDC released its updated forecast for 2024, and the news was decidedly good. Worldwide smartphone shipments are expected to grow nearly 6% in 2024, reversing the declines of last year.
A rising tide lifts all boats, or so the saying goes, so rising smartphone sales will no doubt benefit Apple.
3. An increasing share of the market
Apple's iPhones have long been among the most sought-after, but the company reached a new pinnacle in 2023. For the first time last year, the company nabbed each of the top seven spots on the list of Top 10 best-selling smartphones, according to data compiled by Counterpoint Research.
This came at a time when overall global smartphone sales were in a slump -- as noted above -- making the accomplishment all the more notable.
4. Pent-up demand
The past couple of years have been challenging for Apple. Sales slumped 3% last year and have only begun to turn around. Revenue edged 1% higher during the first nine months of fiscal 2024, dragged lower by iPhone sales that declined 1%.
One of the biggest factors weighing on Apple's sales last year was the state of the economy. Inflation crimped spending and consumers kept their existing iPhones longer. However, with the economy on the mend, the iPhone faithful will be looking to upgrade their existing devices.
Wedbush analyst Dan Ives estimates there are roughly 300 million iPhones that haven't been upgraded in more than 4 years. He further suggests that demand could drive the sale of 240 million devices in fiscal 2025.
Improving economic conditions could unleash a wave of pent-up demand, which would be a boon to Apple and its shareholders.
5. The AI wildcard
The upcoming iPhone release will be the first to include Apple Intelligence, the company's take on generative AI. It's no secret that AI has gone viral and captured the public imagination, and iPhone users likely aren't immune.
We don't yet have a lot of details about what AI-powered features will be included in the upcoming product release, but a significant enhancement to functionality and the novelty factor could be enough to drive strong demand for Apple's upcoming product cycle.
Beyond the AI-fueled features, there's also the longer-term potential for apps that leverage generative AI. It's still early in the rollout of this groundbreaking technology, so there's still much more opportunity to create new use cases with AI. This, in turn, could drive additional demand for the iPhone.
Buy before Sept. 9?
I generally urge investors to stay focused on the long term, but this is one of those rare exceptions. There are a number of near-term catalysts that could propel the stock higher in the months ahead -- but there's still no substitution for a long-term mindset.
For investors interested in initiating a position or adding to their stake in Apple, now might be a good time.
In any case, I believe the stars are beginning to align for Apple and its investors, and recent challenges could soon be a thing of the past.
Danny Vena has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy .
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