Tech Stocks Bounce Back and Apple's iPhone 16 | Bloomberg Technology

10 Sep 2024 (8 days ago)

Tech Stock Performance and Market Trends

Tech stocks experienced a slight rebound after a significant decline the previous week, which was their largest in two years.
Tech stocks experienced their most significant weekly decline in two years due to concerns about concentrated technology investments and disappointing earnings.
The S&P 500 had its worst week since March 2023, with a 4% decline, while tech stocks saw their worst performance in two years.
Despite the market downturn, company fundamentals remain relatively strong, with many companies exceeding earnings expectations and expanding beyond the "Magnificent Seven" tech giants.
Investors are currently questioning valuations in the tech sector and whether it is the right time to invest, with some trading individual names due to volatility.
There is an expectation that AI will drive productivity gains in the future, although there is limited evidence of this happening currently.
Concerns remain about the strength of the Chinese consumer and the impact on tech demand.
The NASDAQ experienced its worst week since 2022 with a loss of over 400 billion dollars in a single day.

Apple's iPhone 16 and AI Strategy

Apple's stock was at session lows leading up to their annual product event.
Apple's new iPhone models will have minimal updates, with the Pro versions receiving two camera upgrades and a new touch-sensitive camera button.
Major design changes are not expected in the iPhone 16, and demand is lower than in previous years, making an iPhone "super cycle" unlikely in 2023.
An iPhone "super cycle" is expected in 2024 with the iPhone 17, which will have significant design changes and launch with Apple Intelligence fully implemented, potentially even in China.
Apple Intelligence's rollout will take time as it needs to be adapted for different countries, languages, and cultures to be effective and relevant to individual users.
Apple is facing scrutiny and legal challenges from regulators, including the Department of Justice, over its market dominance and business practices.
Despite regulatory pressures and competition, Apple's strong customer base and profitability are expected to shield it from significant short-term impacts.
Apple's approach to AI emphasizes mass scale, privacy, and ambient experience, leading to higher user trust compared to other AI offerings.
The integration of AI into Apple products is expected to drive a significant refresh cycle, particularly among the existing 1.34 billion iPhone users, with an estimated 240 million users upgrading every three to four years.
Despite potential limitations on Apple Intelligence availability in certain regions like China and the EU, consumer interest remains high, suggesting a strong demand for Apple products and the potential for a "super cycle" in sales.
Apple is set to release the iPhone 16, with a staggered rollout planned for next month alongside iOS 18.1.

AI Developments and Concerns

Chai Technology, a startup focused on using AI for drug discovery, has raised $30 million in funding. The company claims that its AI model, Ghostbusters, outperforms competitors like AlphaFold in predicting protein folding.
Oracle erased earlier gains ahead of its earnings report, with investors hoping for continued momentum in AI demand.
Some analysts are nervous about Oracle's AI claims, with Mizuho questioning if Oracle is an "AI faker".

Elon Musk and Tesla

Some investors have expressed concern over Elon Musk's use of Tesla chips for his other company, X AI. They feel that this may not be in the best interest of Tesla, even though the companies likely share investors.
Elon Musk has been known to share employees and resources between his companies. For example, when he acquired Twitter (now X), he brought in Tesla engineers to help staff the company.