Guo Mingchi pointed out that Apple's progress in generative artificial intelligence is clearly lagging behind its competitors, and there is no sign that the company plans to launch its AI services next year.
Apple fell 1.6% to a one-and-a-half-week low overnight, as the market held its breath for Apple's earnings report on Thursday.
On Wednesday, "the analyst who knows Apple best," Ming-Chi Kuo, made predictions about Apple's annual performance and progress in AI. He pointed out that Apple's Q2 financial data is not likely to be noteworthy, and progress in AI has been slow. There are no signs indicating that Apple will integrate AI edge computing with hardware products by 2024.
Regarding the financial performance in the earnings report, Ming-Chi Kuo stated:
Q2 2023 is the traditional off-season, and Q3 2023 is the period of transition between old and new iPhones. Therefore, the financial results and forecasts during this time are usually not noteworthy. If Apple's recent EPS can exceed market expectations due to the performance of its services business, decreased component costs, and exchange rate fluctuations, it will benefit the stock price in the short term.
According to a previous article, it is widely expected in the market, based on Refinitiv data, that Apple's quarterly total revenue will decline by 1.6%, marking the largest decline in revenue for three quarters since 2016.
Regarding the slowdown in AI progress, Ming-Chi Kuo explained:
Due to significant lag behind competitors in this field, the company may not spend too much time discussing artificial intelligence during the earnings conference call.
Currently, there are no signs indicating that Apple will integrate AI edge computing with hardware products by 2024. Therefore, it is currently difficult to motivate Apple and its supply chain stock prices in this regard.
There will still be a few suppliers with clear growth trends in the Apple supply chain (such as increased market share and specification upgrades driving ASP increases), but the shipment estimates for Apple's hardware products in 2H23 are weaker than in 2H22. Therefore, unless Apple explicitly expresses a positive outlook for 2H23 or market demand in 2024, this earnings report is unlikely to have a positive impact on the stock prices of most suppliers.
Most of the zero-component shipment plans in 4Q22 have not changed significantly. Unless the demand after the release of the iPhone 15 exceeds market expectations, most suppliers will face growth pressure in 2H23 due to the lower demand for the iPhone 15 compared to the iPhone 14.
Regarding Apple's latest release, Vision Pro, Ming-Chi Kuo expects that the estimated shipments for Vision Pro in 2024 will still be relatively small. Therefore, it is currently difficult to boost Apple and its supply chain stock prices in this regard.