Apple Shares Surge Ahead Of New AI Hardware Launches

Apple’s stock price surged 7 percent on Friday amidst optimism that its upcoming product releases and artificial intelligence (AI) plans will drive renewed sales following declines that continued to dent its second quarter financial results announced last week.

The slate of new product announcements is set to begin on Tuesday with an iPad-focused virtual event starting at 7 a.m. Pacific time, three hours earlier than usual, a time slot that makes it accessible to users in the critical Asia market as well as in Europe.

The share buying frenzy, which added nearly $200 billion (£159bn) to Apple’s market capitalisation, followed a Thursday investor call where the company forecast fiscal third-quarter sales exceeding Wall Street’s expectations as well as a record-breaking $110bn share buyback scheme.

The company finished the day with a market capitalisation of about $2.87tn, second only to Microsoft’s $3tn.

AI hardware

Analyst Erik Woodring of Morgan Stanley said in a research note that investors were now looking ahead to Apple’s World Wide Developer Conference (WWDC) in June, at which it is expected to announce major AI plans, and that the “earnings revision trough now seems to be in the rear-view”.

Some analysts said they believe Apple, which has up to now been seen as a laggard in the AI race, will be able to profit from the technology without the major capital expenses seen by rivals such as Microsoft and Google.

“We think Apple can deliver AI upside without the AI capex we see elsewhere,” said Evercore ISI analyst Amit Daryanani.

The WWDC announcements are expected to include AI-focused features in the next version of macOS supported by the next-generation M4 chip.

Similar AI features and hardware are expected to be on the way for the next edition of the iPhone, set to be announced in September.

‘Let Loose’

The M4 chip to make its debut at this week’s iPad event, called “Let Loose”, where Apple is expected to announce major hardware upgrades to a product line that was last updated more than 18 months ago.

Analysts expect Apple to launch a new iPad Pro with the line’s first OLED screen, used in iPhones since 2017, which improves image quality and should allow the device to become thinner.

One of the iPad Pro models may be powered by an M4 chip, but Apple isn’t expected to elaborate on the chip’s AI capabilities until WWDC in June.

The mid-range iPad Air may see a second, larger-screen model for the first time, a 12.9-inch version matching the size of the iPad Pro, along with the current 10.9-inch model.

Apple is also expected to update the Apple Pencil accessory – which features prominently in its invitation to the event – with features that may include haptic feedback and a squeeze function to execute certain tasks.