Shares of Apple Inc (NASDAQ:) rose 7.26% on Tuesday, one day after the WWDC event highlighting the Apple Intelligence AI product. The move in stocks came as a shock to many, as the event went largely as expected. Analysts at Jefferies emphasized how rare the move in Apple’s stock was, noting that it was a standard deviation of 5.5.
Overall, analysts at the company view the response in the stock as a combination of underweight positioning, “combined with a lot of commentary around new AI products (such as Apple Intelligence), creating more upside potential for the next iPhone cycle. “
While there is much debate about the exact reason for this move, Jefferies notes that the following is worth highlighting since Apple has a $3 trillion name.
Analysts emphasize:
- This was the largest outperformance versus QQQ since July 2020.
- This was the third largest one-day relative move against QQQ in the past fifteen years.
- This was the fifth largest notional amount traded in the past 25 years; the other four came in 2020.
- The stock saw its largest single-day call volume since November 2021.
Furthermore, the analysts highlighted that two stocks (AAPL and NVDA) represented 20% of the total options volume on the market on Tuesday.
“Both stocks saw >50% of current option flows in the June 14 paper, meaning nearly 4 million three-day options traded across AAPL and NVDA today,” analysts note.
While Wall Street analysts were generally mixed on the event, two comments stood out Tuesday that might help explain investors’ thinking:
Rosenblatt “Apple sells more than 200 million iPhones per year and has an iPhone installed base of more than 1 billion devices. But only about 10% of its installed base consists of the high-end iPhone 15 Pro and Pro Max models that include the A17 Using Apple’s Pro Chip But that chip, and presumably newer ones, is what’s needed to access the new AI features Apple outlined during its WWDC presentation on Monday.” The company rates Apple as neutral.
DA Davidson: “Another Napster-to-iTunes moment. We believe yesterday’s presentation aligns with one of Apple’s previous milestone moments: moving digital music from a standalone app of dubious legal status (like Napster) to a experience that is integrated into existing consumer applications (i.e. We believe that the integration of summaries, enhanced search, multimodality, text generation and enhanced photo editing into the existing ecosystem will drive much broader adoption of AI than we have seen to date have seen meaningful agent capabilities that allow Siri (and more) to perform tasks on behalf of the user. Importantly, Apple is uniquely positioned to offer these capabilities, and may soon be the only one able to do so thanks to the information from the consumer, as well as their trust, can deliver the above deeply integrated functionality in a way that standalone chat applications, PCs and Android devices may not be able to fully replicate.” DA Davidson upgraded the stock to Buy after the event.
