Market Insights

Apple is expected to release new iPhones today, but a lot of other things are happening with the tech giant.

Wall Street’s narrative on the company has shifted toward other initiatives like services and stock buybacks. After all, AAPL‘s a victim of its own success now that it has one of the most successful products in history. The real thing to watch now is its ability to expand into new areas.

First, today’s news. CEO Tim Cook takes the stage at 1 p.m. ET for the “Apple Special Event.” Everyone expects him to announce three new iPhone models with only marginal improvements. Camera and processor upgrades — but nothing dramatic like bigger screens.

Apple Watch is also likely to receive minor feature enhancements.

Services Gaining Traction

Ironically, last week may have featured bigger news when Morgan Stanley’s Katy Huberty issued a bullish report on AAPL. The closely watched analyst noticed App Store revenue was up 22 percent so far in the third quarter, led by entertainment. That better-than-forecast number helped relieve fears of media companies jumping ship to avoid AAPL’s billing fees.

Services are a big deal because they’re a new frontier for the company, with the potential for faster growth than the saturated handset market. They’re also “stickier” and more recurring. Analysts and investors prefer that to the ups-and-downs of faddish consumer electronics. The result can be higher valuations.

The next big story is China, important for two big reasons. First, AAPL relies on the Asian country for most of its manufacturing. Second, it’s potentially huge growth area because iPhones have less than 15 percent market share on the Mainland.

This makes President Trump’s October negotiations with Beijing a huge story for AAPL. So far we don’t know the timing, but events last week suggested the world’s two biggest economies are moving closer to a deal.

5G: Bad Now, Good Later?

Another long-term item is the introduction of 5G networking in 2020, which won’t just make communications about 50-100 times faster. It’s also expected to result in about $2 trillion of capital investments over the next five years.

The problem for Cook today is that none of his new iPhones will support the new technology. Given all the promise of 5G, will consumers wait until next year for the big mega-launch? That’s been a common narrative in a lot of commentary about AAPL right now.

However, Bank of America Merrill Lynch is bucking the consensus. Its analysts see the potential for a bigger upgrade cycle before 5G, arguing that the Street is underestimating the number of older iPhones.

Charts and Chipmakers

Traders may want to watch two other things with AAPL: patterns on its price chart and supplier companies.

AAPL closed yesterday at its highest price since November 2 and is near the top of a potential ascending triangle. Notice its higher lows while the stock remained trapped around the same $215 level. Technical analysts sometimes consider that a bullish pattern.

Second, AAPL is the main customer for semiconductor companies like Skyworks Solutions (SWKS), Qualcomm (QCOM) and Qorvo (QRVO). Any sense of iPhone strength or weakness could impact those could stocks.

In conclusion, AAPL’s late-summer/early-autumn product launch has been a mainstay for the markets since 2011. This year will gain plenty of attention, but other catalysts like China and services have become increasingly important. Hopefully this post helps you track some of the big things to watch.