Apple shares bounced Monday after last week’s three-session losing streak, with investors looking past new allegations from European competition regulators to the expected AI-driven iPhone boom. European Union officials said Apple was in breach of the bloc’s Digital Markets Act, claiming the U.S. tech giant’s App Store rules prevent developers from “freely steering consumers to alternative channels for offers and content.” Monday’s development follow Apple’s announcement Friday that the company will delay the upcoming artificial intelligence features in its devices for EU users this year due to regulatory uncertainties. “You can’t incentivize companies not to do well,” Jim Cramer said Monday. “I am concerned that Europe, which has been a great place for Apple, does not get the chance to take advantage of the AI.” He added, “It just does not make sense to me.” Apple could face EU fines of up to 10% of the company’s total global revenue if found in violation of the DMA’s competition policies. In a statement to CNBC, Apple responded that it’s made changes to appease regulators and comply with DMA rules. “We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created.” Ultimately, though, JPMorgan analysts said Monday that Apple’s AI features delay overseas would have little impact on financials. The Club shares that view because an AI-powered iPhone, and subsequent upgrade cycle, will boost revenue in Apple’s two-largest markets: the U.S. and China. Users will trade up to newer models as these innovative features roll out globally — boosting sales and offsetting weakness in other markets. AAPL YTD mountain Apple YTD Overall, Apple stock has had a rocky 2024 performance. Concerns about lagging iPhone sales in China weighed on the mega-cap name as local rivals like Huawei grabbed smartphone market share. The stock declined to around $164 per share in mid-April before finding its footing ahead its May 2 earning report. When the numbers came in, it was clear the worries were overblown and the stock jumped further. Then after the AI announcements at Apple’s annual Worldwide Developers Conference (WWDC), shares surged to all-time highs above $220 on June 12. Apple has, however, tumbled around 5% since then to around $208 on Monday. “There is a sense that it ran too much versus its AI, and I think people are making a mistake,” Jim said. “This is all about the next [iPhone] iteration, and it has a lot of good things.” He added, “You have a lot of people with old phones, and they may [swap] up.” Melius Research echoed those sentiments in a Monday note. Analysts boosted Apple’s price target to $260 per share from $227 — implying more than 25% upside from the stock’s previous close. Melius said that new AI features should drive a multi-year upgrade cycle for the iPhone through fiscal year 2025 into fiscal year 2026. “The AI, Siri, and privacy features are all compelling to the layman — and almost everyone needs a new phone to get them,” the analysts wrote. “We are fans of embracing the obvious, even from here, since the world’s most loyal install base has to upgrade to get AI.” Apple has said its artificial intelligence features will only be backward compatible with the iPhone 15 Pro and Pro Max, which were released last year. (Jim Cramer’s Charitable Trust is long AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC) on June 10, 2024 in Cupertino, California. Apple will announce plans to incorporate artificial intelligence (AI) into Apple software and hardware.
Justin Sullivan | Getty Images
Apple shares bounced Monday after last week’s three-session losing streak, with investors looking past new allegations from European competition regulators to the expected AI-driven iPhone boom.