New iPhone Models with AI Features: An Opportunity for Apple?

The leaves are beginning to change color, and as every year in September, Apple is unveiling the new iPhone. This time, it is the iPhone 16, offered in four different price categories and integrating numerous new features in the realm of Artificial Intelligence (AI). Entering the era of AI-supported iPhones could be groundbreaking for both Apple as a company and its shareholders. But is it worth investing in Apple stock now? Since its market launch over 15 years ago, the iPhone is known to have revolutionized the world of personal technology. However, the models of the last five years have lacked substantial innovation, aside from new colors or slightly improved features. From a hardware perspective, the scope for innovation seems largely exhausted. To continue distinguishing itself from other smartphone manufacturers, Apple has increasingly focused on software products such as Apple Health and iCloud over the past few years. These products bind customers more closely to Apple and generate additional revenue for the company. The next step in Apple's evolutionary process could now be the implementation of AI. The new iPhone 16 and some older models will receive extensive AI updates, including an enhanced image search, ChatGPT integrations, and a potentially revitalized Siri. This would enable users to perform natural language searches and search images via voice command, among other things. The pricing for the new iPhones ranges from $800 to $1,200. Higher prices stem, among other things, from the fact that fewer people renew their devices every year. However, demand for the new software tools could lead to increased upgrades and higher revenues—a much-needed boost as the company's volume growth has stagnated in recent years, especially due to a slowed upgrade cycle and declining consumer spending in markets like China. Apple is betting on AI, but is this the breakthrough? Developer consultation is supported by OpenAI and ChatGPT, and many of the announced features will only be available within the next 12 months. This raises questions about whether Apple is truly leading in this area. Ultimately, the attractiveness of Apple's iPhones depends less on their hardware and more on the software and services they offer. As these products are already offered by competitors like Google, Apple's strategic approach could be called into question. Currently, Apple is valued with a price-earnings ratio (P/E) of 34, which is above the S&P 500 Index average of 29. Investors are banking on the new AI features to boost sales and drive profit growth. But if sales stagnate, the high entry point could lead to disappointments. Some experts question the significance of AI for Apple and point to better opportunities with fast-growing companies like Alphabet. The search engine giant's stock, due to its more attractive valuation, could be the better choice. Before investing in Apple, consider: The Motley Fool Stock Advisor recently identified ten stock tips for long-term investments—and Apple is not among them. One of these stocks has jumped 729-fold since its recommendation in 2005.