From AI to FOMO: Apple Is Riding 3 Enormous Tailwinds into September

Next Month Will Be Critical for AAPL. Here’s Why.

Apple (AAPL) is trending this month after the market got wind of Warren Buffett’s portfolio trimming, which slashed his AAPL position in half to 400 million shares (still a hefty chunk of change).

Despite the momentary panic that ensued, Apple stock has risen by more than 26% over the last six months.

The company’s third-quarter results beat expectations, thanks to strong growth in services and iPad sales, which surged 14% year over year and 24% year over year, respectively.

Can Apple keep its winning streak going? Or is it doomed for a slowdown?

We could find out with Apple’s September Keynote just a few weeks from now. It’s one of LikeFolio’s favorite annual events, when Apple shows off its latest tech, consumer buzz rockets off the charts, and our team slices and dices the data to show you where AAPL could be headed next.

And don’t forget that Apple Intelligence, the company’s proprietary AI, is set to roll out in September, too.

Here are three reasons why this event will be critical for Apple – and its investors…

No. 1: Apple Is Sitting on the Edge of a Massive Upgrade Cycle

Estimates suggest nearly one in five iPhones hasn’t been upgraded in four or more years. Many consumers have been holding out for the next giant leap in user experience.

In fact, most users upgrade their iPhone every three years – so this is a coiled spring. You can see consumer interest growing for Apple’s top sectors below:

(iPhone searches are currently up by 4% year over year.)

No. 2: iPhone Continues to Drive Company Revenue

The iPhone has moved from a like-to-have to need-to-have for consumers.

This “essential” accounts for a whopping 46% of Apple’s revenue (~$39.3 million in the most recent quarter). But its impact on sales is deeper than the device itself. That’s because the iPhone drives subscription sales such as Apple Music, Apple TV+, Apple Fitness, and more.

These services now account for nearly 30% of revenue – more than Mac, iPad, and wearables combined. And as you saw in the chart above, services are currently Apple’s top-searched offering.

No. 3: AAPL Is the King of FOMO

We all know the blessing and curse of the blue bubble/green bubble experience for Apple versus Android users when it comes to messaging… But the release of Apple Intelligence could take this “FOMO” (fear of missing out) to the next level.

Only the latest iPhone models (15 Pro and 16) will gain access to Apple Intelligence, which comes with AI-powered upgrades for nearly every tool on the iPhone – from writing, to Siri, to iMessage summaries and prioritization – forcing more consumers to upgrade if they want those features. (It will also be accessible to certain Mac and iPad models from all the way back in 2020.)

Apple Intelligence is particularly appealing to consumers, thanks to its core integration across the Apple ecosystem. It has access to data, tools, and apps, allowing it to perform functions no other AI previously could. (Of course, this has also led to security and privacy doubts.)

Whether these tools are worth the expensive upgrade is the primary question at hand.

If Apple Intelligence proves to be even half as good as consumers expect, the boost to iPhone upgrades could be significant.

What We Know (and What We Don’t)

At LikeFolio, we can’t speak to Apple’s performance in China, where competition is mounting from smartphone manufacturers like Huawei Technologies. Declining sales in this segment (down 6% last quarter) have been a noted pain point for AAPL in 2024.

However, our Data Engine gives us a very good understanding of English-speaking consumers, Apple’s largest cohort.

Bottom line: We know that consumer search patterns, the timing of upgrade cycles, and the introduction of Apple Intelligence are three enormous tailwinds at Apple’s back. Add a layer of FOMO on top, and it’s clear this really is Apple’s game to lose.

What Comes Next

We could see Apple’s first-ever AI device as soon as September 10, which is the rumored date for its next Keynote event. We’ll be keeping a close eye on the consumer buzz it generates next month.

But AAPL may not be the best way to play this after all. Instead, check out the three tiny companies that could be working behind the scenes on Apple’s AI-powered iPhone.

These “silent suppliers” could be the real winners come September.

Until next time,