Apple’s Big Event: What to Watch

Here’s what investors will be watching during Apple’s keynote on Tuesday.

| More on:
Bad apple with good apples

Image source: Getty Images

It’s that time of the year. On Tuesday morning, Apple (NASDAQ: AAPL) is set to host its annual September product event. New iPhones, of course, are usually the main event. But other new products and services may get some attention, too.

Apple executives are scheduled to take the stage tomorrow at 10 a.m. PDT at the company’s Steve Jobs Theater in its Apple Park campus in Cupertino, California. Rumors circulating ahead of the event are rampant, as usual. Beyond the company’s usual iPhone refresh, Apple could potentially unveil an updated Apple Watch, new MacBook Pros, and more. But investors will likely be focused on two main areas: iPhones and services.

Can new iPhones reverse the segment’s declining sales?

The pressure is on for Apple’s iPhone business. For the trailing-nine-month period ending Jun. 29, iPhone revenue fell 15% year over year. This highlights how challenging it has been for Apple to grow its iPhone revenue during the company’s latest iPhone lineup’s product cycle. The iPhone September 2018-launched XS, XS Max, and XR simply weren’t exciting enough to help Apple live up to the iPhone X’s blockbuster performance in the prior fiscal year.

Of course, the iPhone represents a significant portion of Apple’s business. To be exact, iPhone accounted for nearly 56% of Apple’s trailing-nine-month revenue. Lackluster iPhone sales compared to Apple’s fiscal 2018, therefore, have weighed heavily on the tech giant’s overall financial performance. During the trailing-nine-month period ending June 29, Apple’s total sales fell 3% and net income declined 8%.

To differentiate its iPhones this year, rumors suggest much of the focus may be on their cameras. The ever-active Apple rumor mill is guessing that Apple will refresh all three of last year’s iPhones with new versions of the same sizes. However, this year’s upgrades to the iPhone XS and XS Max will reportedly include triple-lens camera setups, while the upgraded iPhone XR will get a dual-lens camera for the first time. Of course, all three of the phones are also expected to get new processors. Some new colors are expected, too.

Will new services help Apple return to growth?

While the iPhone still accounts for the bulk of Apple’s revenue and operating profits, the tech company’s services business is arguably equally important to investors. That’s because the segment offers a sustainable revenue stream, is growing faster than the iPhone, and has an impressive gross profit margin of 64.1%. Therefore, though Apple’s services segment is smaller than iPhone, it’s more important to the company’s long-term growth story.

While it would be great to see Apple launch yet another new service on Tuesday, the company’s discussion of services during the event may focus primarily the four new services announced earlier this year. Apple could give updates on the two of these services that have already launched — Apple News+ and Apple Card — or it could provide more details on the two of these services it hasn’t brought to market yet: Apple TV+ and Apple Arcade. Both of these services are supposed to launch this fall.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

More on Tech Stocks

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Businessman holding AI cloud
Tech Stocks

AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks

Investors looking to invest in companies doing big things in AI should consider these three stocks for their portfolios.

Read more »

stock research, analyze data
Tech Stocks

Forget Shopify: These Unstoppable Stocks Are Better Buys Today 

Should you consider buying Shopify stock while rivals consider a buyout or should you go for stocks with a stronger…

Read more »

A colourful firework display
Tech Stocks

2 Potentially Explosive Stocks to Buy in March

These two growth stocks are destined for many more years of market-crushing returns.

Read more »

edit CRA taxes
Tech Stocks

TFSA Millionaires Are Learning They Can Still Be Taxed

If you day trade stocks like Shopify (TSX:SHOP) in a TFSA, you may be taxed.

Read more »