Analyst Warnings Cause Apple Shares to Plummet Amid AI Disappointment

Apple's market value took a significant hit in early trading, with more than $116 billion (equivalent to £88 billion) wiped off its valuation. This occurred after analysts cautioned about weaker-than-expected demand for its latest iPhone model and subpar advancements in artificial intelligence (AI) features, which failed to impress the company's fanbase. Shares of the world's most valuable company fell by 3.3%, following a report on pre-order sales of the new iPhone 16 series by Ming-Chi Kuo, an analyst at TF International Securities. The newly launched device includes AI tools capable of functions like finding restaurant reviews and menus by pointing the camera at the establishment, as well as identifying animals and plants. Despite these features, Apple announced that its AI initiative, dubbed Apple Intelligence, would only be available in the US in beta form in the coming weeks. A localized version is expected to launch in the UK in December, with other European countries and markets having to wait until 2025. According to Ming-Chi Kuo’s note to clients, the first weekend pre-order sales of the iPhone 16 series are estimated at about 37 million units. This figure is roughly a 12.7% decline compared to the iPhone 15 series sales during a similar period. Kuo attributes the lower-than-expected demand to the absence of Apple Intelligence at the device's launch. Adding to the cautious sentiment, JPMorgan analyst Samik Chatterjee noted that while consumers still prefer the Pro models, the current orders are "starting off modestly slower compared to last year." US stock indexes displayed varied movements as Wall Street prepared for one of the most anticipated Federal Reserve meetings in years. The S&P 500 was down by 0.1% after fluctuating between gains and losses, while the Dow Jones Industrial Average showed a 0.3% gain. The tech-heavy Nasdaq, however, fell by 0.8%. Top White House economic adviser Lael Brainard commented that the US economy has made significant strides in reducing inflation and now needs to focus on safeguarding recent labor market improvements. Her remarks come just days before the Federal Reserve's expected decision to begin cutting rates. This has led to heightened expectations of a possible aggressive rate cut to stimulate the economy further. Meanwhile, the European Stoxx 600 index closed slightly lower, driven down by losses in heavyweight technology shares despite last week's gains. On the FTSE 100, JD Sports and Marks & Spencer led the gains, whereas Phoenix Group and Melrose faced the most significant declines. In another significant development, Boeing announced it is pausing hiring and halting most staff travel, along with other cost-cutting measures, due to a strike that has disrupted its operations.