The Power Gauge Perspective on Apple’s Big AI News

Apple (AAPL) just turned heads with a major new announcement…

You see, the tech titan just kicked off its annual Worldwide Developers Conference this week. And this year’s focus wasn’t surprising in the least.

Apple zeroed in on artificial intelligence (“AI”). Or as the company prefers to call it – Apple Intelligence. Seriously.

According to the company, Apple Intelligence is coming to its iOS operating system “soon.” And it’s supposed to deliver on nearly all the promises that Apple originally made with the Siri voice assistant.

In other words, Apple Intelligence will let Siri become the virtual assistant it was meant to be. That means retrieving information across multiple apps, doing tasks, and more.

Most interestingly, Apple has announced a partnership with OpenAI. As you likely know, that’s the tech company that created the hit AI chatbot ChatGPT.

With this partnership, Siri will have access to ChatGPT. And Apple says that users with paid ChatGPT accounts will be able to access those features through Siri.

Apple also says that it will eventually connect with other so-called “large language models,” which is the AI tech behind ChatGPT.

This all sounds pretty grand. But there’s no question that Apple made this announcement knowing that Wall Street would be watching.

Given the big news, you would likely assume that AAPL shares would be set to soar in the weeks and months ahead in response. So today, let’s take a deeper look and see what the Power Gauge has to say about the stock…

Apple’s main event at the conference had the polish you’d expect. And the company is trying its best to sell these new AI features as something amazing.

But folks, Apple is still facing some hard realities.

Many of the features it has announced are ones that Alphabet’s (GOOGL) Google already built into its mobile operating system… years ago. And the others are of the “someday we’ll figure this out” variety.

Now, to be fair to Apple, that’s the point of its annual developers’ conference. The idea is to get third-party developers excited about the tools in iOS.

Still, it feels like Apple is playing catch-up. And that shows in its share price, too. Let’s start with a one-year chart of the stock with some data from the Power Gauge…

As you can see, Apple’s stock largely traded sideways for most of 2024. But in the wake of the AI announcement, AAPL shares spiked higher earlier this week. They’re now up about 11% this year.

Meanwhile, the tech-heavy Nasdaq 100 Index is up about 16% year to date. And the broad market S&P 500 Index has posted a roughly 14% gain over the same time frame.

Put simply, Apple is still trailing the market’s big move higher this year.

Could the Apple Intelligence announcement be the start of a turnaround? Sure… and we’re seeing what could be the very beginning of that.

Take a look at the bottom panel below the price chart…

That’s our Power Gauge rating. It looks at more than 20 distinct factors – everything from financials, to technicals, to expert analysis. And it distills it all down into a single rating. These range from “very bearish” to “very bullish.”

As you can see, Apple just shifted into “bullish” territory for the first time since the start of the year. But you’ll also notice that it has struggled to maintain a “bullish” rating throughout most of the past 12 months.

And the Power Gauge makes it clear the company has some work to do. Take a look at this screenshot from our system…

The recent move to “bullish” territory is driven by improvements in the Experts and Technicals categories.

But as you can see, the company has a lot of room for improvement in the Financials and Earnings categories that the Power Gauge rates.

So, Apple spoke. The company said it was committing to AI. And Wall Street listened.

Now, Apple needs to deliver results that directly contribute to growth.

And we’ll have to see if that’s enough to maintain a “bullish” rating – or even push the company into stronger territory in the Power Gauge. I’ll have my eye on the stock.

Good investing,

Vic Lederman

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