Apple (AAPL) has broken correlation with its mega-cap tech peers since late April, trading as a counter to the AI infrastructure trade. It has not committed to buying and investing in AI at the scale of its peers. On days when the AI infrastructure trade falls, Apple often gets rewarded.
The Launch Event
New CEO John Turnis led his first product launch event. The reaction dominated the trading day. The foldable phone took over the headlines.
iPhone Duo. Apple's first foldable phone, marketed as an entrance into a new category while still an iPhone. It is hinged but hard to spot the seam when open. Opened, it is about the size of a passport. It has a front-facing screen that works whether folded open or closed. Some analysts called it the biggest new hardware category since AirPods.
iPhone 18 line. A full overhaul of the 18 Pro and 18 Pro Max. Smaller dynamic island. A 48-megapixel fusion main camera with more stops for control over depth of field and low-light exposure, aimed at complaints that the camera lagged rival devices. New A20 chip. A photo authenticity sensor, embedded in the device, tags a photo as taken with an iPhone rather than made by AI.
Siri AI and iOS 27. Full rollout of Siri AI, running on a double-powered 16-core neural engine. The main new feature is personal context awareness: it uses data already in the Apple ecosystem - phone content, Apple Watch, and health data for health and wellness tracking - to act on personal needs. Example given: search your email for a restaurant gift card, find it, and make the reservation.
Apple Watch Series 12. Focus on AI health with an expanded AI rollout, plus a new casing.
AirPods. Fifth iteration. More active noise cancellation, now included in the base model.
Pricing. The iPhone 18 Pro and Pro Max rose $100 each. The watch and AirPods kept their prices.
Analyst Reaction
- Citi: Buy, $365 price target. Likes the foldable phone; calls it the biggest new hardware category since AirPods.
- JP Morgan: Overweight. Largely in line with expectations; pricing near the base case. Sees numbers below the larger increase investors had expected due to memory costs. Apple is walking a fine line, absorbing those costs while keeping room for a positive cycle.
- Bank of America (BFA): Buy, price target cut to $370 from $380. Called the showcase positive. Pricing came in lower than expected; expects higher units but pressure on margins.
- Rosenblatt: Similar view. The light touch on pricing could weigh on gross margins because of memory costs.
- Jefferies: Likes the foldable phone and the cheaper 256GB option, which improves affordability. Notes Apple is protecting volume at the expense of margin.
The common thread: because price increases were smaller than expected, there are margin concerns.
The Trade
The foldable phone caught attention in a way recent Apple launches have not, despite the past success of the Apple Watch and AirPods. Waiting for a second generation on a product this different is reasonable.
Apple's bet is that money spent on AI by OpenAI, Anthropic, and Google filters into its ecosystem, with Apple as the wearable product people use that AI on - a good bet. The foldable phone is a neat advancement, but people may not jump to spend $2,000 for it, and it looks somewhat like a tablet.
The market was broadly down while Apple rose. Chasing a stock in a big rally is not appealing. The broader backdrop is tough: high oil prices, high inflation, the market off its morning lows, and September as a seasonally weak month. After Apple's run-up, buying right here is not attractive.
The suggested position: sell the September 310 put (expiring in eight days) to collect $2.05 on a $320 stock. That gives almost 4% downside protection over the next week. If Apple pulls back, you buy it at 310; if not, you keep the $2.05 - a strong yield for a week.
Volatility
Individual stocks, especially semiconductors and AI trades, show tremendous volatility, yet the headline VIX has stayed subdued. The reason: when the semiconductor index or the AI trade dips, a non-correlated move into value stocks or other market sectors offsets it, keeping the broad market calm. Big picture, this reflects a market higher on the year despite heavy uncertainty - the economy keeps growing even with higher inflation, and money leaving some sectors goes right back to work in others. The real risk on the volatility front is when all stocks move the same way; that is when big downward moves hit and the VIX climbs.
