Apple’s New Air Model Is Attractive, but Unlikely To Spur Big Growth

Key Morningstar Metrics for Apple Inc.

• Fair Value Estimate: $210
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

Apple AAPL unveiled its new iPhone 17 lineup on Tuesday, including a brand new, ultrathin iPhone Air. Management also announced updates to the Watch lineup, including Series 11 and Ultra 3, and the AirPods Pro 3.

Why it matters: The iPhone 17 family met our expectations and shows a continuing evolution of Apple’s flagship product. We find the new Air model attractive, but we still don’t expect the new form factor to spur a significant unit sales growth inflection for the firm.

• Apple emphasized its existing artificial intelligence feature set throughout, including Live Translation and Visual Intelligence features. We like Apple’s AI features, but we view them as incremental. We look for a bigger overhaul of Siri and a potential partnership with Google Gemini to spur an inflection in unit sales.
• We continue to see Apple’s hardware and software design as second to none. We see the iPhone 17 family as largely evolutionary, but reinforcing Apple’s compelling iOS ecosystem that drives its wide economic moat.

The bottom line: We maintain our $210 fair value estimate for wide-moat Apple. We continue to see longer-term iPhone unit sales growth slowing, and don’t see the new Air model as a positive catalyst. Shares cut back by 2% intraday on the releases, and look moderately overvalued to us.

• We model 5% annualized growth for iPhone revenue through fiscal 2029, compared with a 10-year historical growth rate of 7%. This is driven by our expectations of continued growth headwinds from China and slowing consumer refresh cycles globally.

Coming up: All of the new products launch on Sept. 19. We expect the latest releases to drive typical seasonal revenue growth for Apple. We expect a slight sequential uptick in the September quarter with 12 days of new-product sales, and significant sequential growth in the December quarter.