Hello everyone, this week’s 【Opportunity Rapid Dispatch】, let’s take another look at the leader of the seven giants in the US stock market. $Apple(AAPL.US)$ After experiencing market turmoil in August, Apple remains on top with a Market Cap of $3.48 trillion.$Microsoft(MSFT.US)$ and $NVIDIA(NVDA.US)$ Following closely behind.

At the Apple Worldwide Developers Conference (WWDC) held in June this year, Apple officially announced its collaboration with OpenAI to embed ChatGPT into the new iPhone. The company's stock price surged, breaking the $200 barrier. Three months later, this influx of AI into the Apple ecosystem is also facing a moment of testing.

Apple will hold a product launch event on September 9 local time, where the first iPhone 16 with embedded AI features will make its grand debut. During the event, new products such as the iWatch and AirPods will also be released.

Is AI triggering the strongest wave of device upgrades?

The iPhone 16 will carry the integrated ChatGPT-4o that comes with the iOS 18 system upgrade. According to The Guardian, the first version of iOS 18 will debut in September along with the iPhone 16, and the AI features are expected to be officially PUSHed to users in mid to late October. The first batch of AI features provided in the beta version includes a brand new writing tool, information response suggestions, email summary generation, and call transcription.

Apple Inc. stated that AI features require robust hardware support, making it impossible to run on older devices. Currently, among the released iPhone models, only the iPhone 15 Pro and Pro Max meet the requirements. This means that most consumers looking to use the new AI features will have to consider upgrading to a new device.

Most of Wall Street remains optimistic about this. In the research report released at the end of August, Citigroup listed Apple as the top pick in the AI field, replacing NVIDIA. Citigroup noted that the development of AI can be divided into three phases. The first two phases involve the construction of infrastructure, starting with chips and servers, followed by networks and storage. Apple is expected to excel in the final application phase by widely deploying 'small AI models' for consumer use at the terminals.

"Before AI smart phones penetrate the mass consumer market, consumers need time to test all these new features and truly see their impact on improving daily life. Given Apple's leading position in the high-end smart phone market and its ability to integrate hardware and software, it is best positioned to achieve this," wrote a Citigroup analyst.

Wedbush stated that currently, about 0.3 billion iPhones have not been upgraded in the past four years, and the upgrade cycle brought about by the iPhone 16 launch could be historic. The institution predicts that the introduction of AI will push the company's market cap to exceed 4 trillion dollars.

Third Point, a hedge fund managing over 10 billion dollars, also believes that despite the recent rebound in Apple's stock price, there remains substantial upside potential due to the staggering scale of new AI opportunities.

In addition to collaborations, Apple has recently been pushing for direct investments in OpenAI. According to the Wall Street Journal, the latest round of funding for OpenAI is expected to be valued at over 100 billion dollars, with negotiations ongoing between Apple and NVIDIA. If the investment goes through, Apple will also gain an observer seat on the board.

However, it is noteworthy that "investment guru" Warren Buffett significantly reduced his stake in the company. According to regulatory filings, $Berkshire Hathaway-A(BRK.A.US)$ he sold 0.389 billion shares of Apple in the second quarter, nearly half of his holdings from the previous quarter. This marks the third consecutive quarter in which Buffett has sold Apple shares. The reasons for the reduction have not been disclosed, but some speculate that Buffett may have concerns regarding Apple's future.

The impact of new product launches on stock prices.

Historically, on the day Apple releases a new iPhone, its stock price often declines. The new models are usually considered lacking in innovation, which in turn drags down the stock price. Additionally, investors who buy on expectations before the launch may choose to sell on the actual release, which is another potential reason for the decline in stock price.

Extending the timeframe, over the 60 trading days following the launch event, the stock price generally rises. Since demand for Apple products is typically strong, as sales become clearer, investors usually provide positive feedback. The stock's performance may also be influenced by the overall market; for instance, the declines in 2018 and 2022 occurred during interest rate hike cycles, and the market showed significant volatility.

From a financial performance perspective, Apple remains robust. In the most recent quarter, revenue grew 4.9% year-on-year to $85.78 billion, exceeding market expectations of $84.5 billion; EPS was $1.40, an 11% year-on-year increase, with market expectations at $1.35. This marks the sixth consecutive quarter where both revenue and earnings have surpassed expectations.

Technical analysis and possible strategy.

From a technical standpoint, Apple's stock price has fluctuated within a horizontal channel for over a year. During the WWDC conference in June, Apple's stock price surged with increased volume, breaking above the $200 mark, and after breaking through the channel, the trend continued to develop. Even during the market turbulence in early August, it closed above $200, currently less than 4 percentage points away from its historical highs. Attention can be given to whether Apple can replicate a similar trend after the new product launch as seen in June.

Options Volatility Analysis tools show that as of the market close on August 30, Apple's implied volatility is at a moderate level.

Implied volatility values, IV rankings, and IV percentiles are theoretical estimates; actual market conditions may not always align with the theoretical information shown. Investors should act cautiously when making investment decisions and use multiple sources of information, as there is no guarantee that using tools or information provided on the Futubull application will lead to investment success or reduce investment risk.

Generally, when a company releases its Earnings Reports or major product launches, the implied volatility (IV) tends to rise. This, all else being equal, will increase the price of options.

If it is believed that the company's volatility will amplify, but uncertain whether it will rise or fall in the future, strategies such as buying a Long Straddle can be adopted. If it is believed that the volatility will return to calm after major events, constructing a Short Straddle can be chosen to profit from the decrease in volatility.

Of course, the risks of options are higher than those of common stocks, and fluctuations are also more intense. Interested investors are advised to learn the relevant knowledge systematically before trying.

Risk Reminder

• Market competition: $Alphabet-C(GOOG.US)$ Both recently announced that their new Pixel and Galaxy Smart Phones will be equipped with AI features, and other competitors are also expected to embrace the wave of AI.

• Legal regulations: End devices with embedded AI features may face stronger regulations, and the market expects stricter compliance requirements in segmented markets such as the EU and China.

• High valuation: Zacks Investment reports that Apple's current PE is higher than the Industry average and also above its own median, indicating it is at a high level.

• New products underperform expectations: Currently, the market is relatively optimistic about the company's new product launch, with a possibility of being fully priced into the stock price. If expectations are not met, it may trigger a correction.

Risk Disclosure: This content does not constitute a research report, is for reference only, and should not be used as the basis for any investment decision. The information contained herein is not a comprehensive description of the securities, markets, or developments mentioned. Although the sources of information are considered reliable, the accuracy or completeness of the above content is not guaranteed. Furthermore, there is no guarantee regarding the accuracy of any statements, viewpoints, or forecasts provided in this article.

Options trading carries a high risk and may not be suitable for all investors. The characteristics of options can lead to losses exceeding the principal. Before trading options, please read our "U.S. Options Product Disclosure Statement," "U.S. Options Target Market Confirmation Letter," and documents published by the Options Clearing Corporation (OCC) regarding the "Characteristics and Risks of Standardized Options."