Apple’s ‘problem’ is slowing customer upgrades: Analyst

As Apple’s (AAPL) Worldwide Developer Conference (WWDC) approaches, investors are focused on the tech giant’s new offerings, with a particular emphasis on its advancements in the realm of artificial intelligence (AI). Bokeh Capital Partners Chief Investment Officer Kim Forrest joins Catalysts to share her perspectives on this highly anticipated event.

Forrest acknowledges Apple as “the go-to appliance” in the developed world. However, she notes Apple’s need to continuously innovate to incentivize consumers to upgrade their products: “It has to be fresh and new and wonderful.” Despite the rising costs of Apple’s devices, Forrest notes a pullback among individuals to part ways with their existing products.

“What I think Wall Street really wants to see are compelling reasons why somebody would trade in a perfectly good phone for this new AI-enabled Apple [product],” Forrest tells Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video Transcript

Well again.

Let’s stick with Apple because many investors are viewing Apple’s worldwide developers conference and that expected a I announcement as a catalyst for the stock now increasing competition in China.

Waning demand along with patent and regulatory battles that is, that is actually weighed on shares in recent months.

The stock is now just above the flat line on the year, lagging far behind many of its big tech peers.

So should investors be, considering they’re positioning in Apple with this upcoming announcement in focus here?

To answer that question more.

We wanna bring Kim for us.

She’s Boca Capital Partners founder and chief investment officer Kim.

It’s great to see you again.

So given what Dan was just telling us what we have in mind that we’re going to be hearing from Apple if they do announce some sort of initiative on the A I front, which seems like a sure thing, almost at this point, how big of a catalyst is that going to be for shares?

Sure.

Well, I mean, that’s what investors really have to make their mind up about.

Um, I guess for the developed world and the wealthiest people in that developed world.

Apple is the go to appliance to keep you connected to, well, everything right.

And it has to be fresh and new and wonderful to get people to now spend over $1000 for a new iPhone.

And with each release, they keep getting more expensive and people keep holding to them longer.

And that’s the problem.

At the end of the day, even though Apple sells services, they sell hardware.

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So what I think Wall Street really wants to see are compelling reasons why somebody would trade in a perfectly good phone for this new A. I enabled apple I love Apple intelligence or or apple, uh, whatever the moniker is, but a I, you know, at at Apple, um, I think that is what the driver is.

And if you think that’s gonna happen, maybe you should buy shares if you don’t own them.

Well, Kim, as you just said, that is the big question, right?

I mean and shot.

I run to upgrade our phones early because of a I powered emojis.

I don’t necessarily know that we are right.

So what are you looking at in your apple?

Is one of those names that you put so much personal data to when you’re talking about it.

But what are you looking at in your formulations?

To set out the likelihood of this really driving more demand for Apple?

Sure.

Well, I think we all have an idea of what the perfect device is that we want to use.

And in most times we get to talk to it and it talks back to us and it gets us answers.

And Siri really did kind of push that envelope a whole further than anybody else had, especially if you consider it was on a phone in your pocket.

So imagine that.

But I think this new version of Siri is gonna have to work across, um, apps on the, uh, not just apple apps, but everybody’s apps for it to be really meaningful.

And that’s why they’re putting this out today at the worldwide development, uh, developers conference is to get all the developers excited about using Siri to be able to allow the end customer to have that really great magical experience of saying, um, let’s just pick something out of the air, you know?

Hey, Siri, where should I have lunch and can you order that lunch for me when it comes to, uh, what Apple has done in the past and and using just history as a guide.

Some of the concerns surrounding Apple stock and the fact that they have been late to the game when it comes to a I have are some of those concerns overblown at this point.

And I guess, to what extent do you really see where Apple is trading now?

A real buying opportunity.

Sure.

Well, I, I think it’s, I wouldn’t say fairly priced, but it certainly has recovered from earlier this year.

And yes, there was a huge penalty that they didn’t have those two letters being thrown around with respect to Apple, which is a I like anything earlier this year that had a I enabled.

Or maybe it’s been over the past couple of years.

The A I, um importance as a buzzword has been growing.

So I think they have been penalised.

I would say that they’ve had some real issues, You know, you brought this up in the intro into this piece about China.

China has been a tremendous hurt to this, uh, company.

A little bit could be political because of the tariffs and all of that fall out.

But some of it was, honestly, just better homegrown, probably cheaper options than Apple.

Now, that being said, Apple really does, uh, excel at the consumer experience.

So I think if you’re going to be a long time holder, which we tend to be, our typical hold times are 3 to 5 years.

So looking out in the future, I think Apple has a nice runway ahead of it.

And maybe on a sell off, you should add some shares or initiate a position if you don’t have any can.

This brings me to a point that our tech reporter who is on the ground and, you know, brought up that I thought was so AP He said that they might be giving Wall Street what they want today, but not necessarily consumers.

So I’m curious from your perspective.

How much of a risk is it if Apple is able to please Wall Street today, but they’re not pleasing consumers.

I think that that’s the whole point behind today because consumers don’t tune in to the worldwide developer conference right?

It’s nerd Appaloosa for Apple Developers, which is a good thing, OK?

I mean, I’m making light of it, but, um, it it this is a Wall Street focused, but really, for the developers getting them excited about putting their company’s money, time and effort into building out even more of their platform on Apple.

And that is what this is a AAA, the whole, the whole deal, the whole focus for Apple.

And, um, the developers are Tell me more, why should I be in your ecosystem?

So I think it will be a perfect thing.

Even if consumers yawn at this, what they really want to see is probably in 3 to 4 months time.

You know, a new product, a new iPhone that has some of this enabled and is exciting for customers.