Apple's iPhone Surprise

Apple is far and away the best performing Big Tech stock in 2022, down only 12%. That's ahead of the market: the S&P 500 has lost 17% and the Nasdaq Composite is down 25%. Alphabet, Amazon.com, and Microsoft are each down around 23% this year, while Meta Platforms stock has dropped by more than half.

All eyes were on Cupertino today for Apple's annual iPhone event. The $2.5 trillion tech giant showed off a new lineup of iPhone 14 and iPhone 14 Pro models, plus updated AirPods Pro and Apple Watch models. Executives also revealed a new $799 Apple Watch Ultra targeted at athletes.

The day's surprise came at the very end of the presentation, when Apple unveiled U.S. selling prices for its new iPhone lineup. The company is holding prices steady from last year—an eyebrow-raiser given the overall inflationary environment, higher costs of components, and Apple's enviable pricing power.

The Apple Watch Ultra will cost as much as the entry level iPhone 14. Those new iPhones will feature better cameras, new safety features, and satellite connectivity. Pro models will also have new processors and a redesigned display with a smaller area taken up by front-facing cameras and sensors.

Apple stock finished the day up 0.9%. That's better than its typical iPhone-announcement day performance, which has averaged a decline over the past 21 occurrences. 

Here's Connor Smith with more on the implications for Apple stock:

Wedbush analyst Daniel Ives wrote last week that Apple being on track to release the new phones despite supply chain issues and Covid-19 shutdowns in China is “another massive achievement” from CEO Tim Cook and his team.

Ives told Barron’s via email on Wednesday that it was a “shocker” Apple kept prices unchanged. He believes Apple’s in-house chips are giving the company more flexibility with margins.

The new iPhone is key for Apple, which is facing some concerns about how the broader macroeconomic environment will affect demand for iPhones and other products.

“While the softer macro will clearly play a role in the demand story, we believe the baseline for 220 million iPhone units in [fiscal year 2023] is likely a low bar given the pent up demand story that we are seeing globally for Apple,” Ives wrote. “In the key China region we estimate that roughly 30% of iPhone consumers are in the window for an upgrade cycle with many likely Pro/Pro Max buyers, which continues to push ASPs higher along with the $100 price increase likely.”

Read more from Connor here.