Apple unveils new smart home gadgets. Can they jump-start the stock?

Apple unveiled a slew of new products and updated devices at an event dedicated to smart home products on Tuesday. However, analysts remain unsure whether the rollout will be enough to lift one of the richest stocks in the market, which has largely gone nowhere for several months, Bloomberg reports. Apple shares are up 1.4% in Tuesday trading as of this writing.

At its smart home event in New York, Apple introduced the $299 HomeView smart display, which serves as a smart home hub, along with an updated HomePod mini speaker and Apple TV 4K set-top box. The company also unveiled the Apple Home Collection, a lineup of accessories including cameras, a video doorbell, thermostats, and a smart lock, developed with South Korea’s LG Electronics and France’s Schneider Electric, Bloomberg reports.

Later in October, Apple plans to unveil a touchscreen MacBook Pro and an updated iPad mini, according to Bloomberg. This coming Friday, preorders open for the new foldable iPhone Duo, which represents the biggest design change in the history of Apple’s most profitable device. The iPhone Duo will start at $1,999.

“For a company of this size, you need super-hit products to move the needle on growth,” reckons Peter Andersen, CIO of Andersen Capital Management. “I’m just not sure anything we’re getting is exciting enough to lead to an inflection.” He added: “Apple executes its products flawlessly, but it’s hard to expect these will really take off.”

Andersen coninues: “Not only have there been major players in the home market for years, but Apple is launching these products into a market where consumers are under a lot of pressure.” In his view, Apple looks like neither a value stock nor a growth stock. “Given where the multiple is, it seems questionable to expect much additional stock upside from here.” 

“Apple’s product path seems promising, but I don’t think the first generation of new products will mean much for overall revenue,” argues Lu Zhang, founder and managing partner of Fusion Fund. “It remains to be seen whether we will see the kind of new use cases (for the foldable Duo) that will contribute to a broad upgrade cycle.”

Apple trades at 36 times estimated earnings over the next 12 months, its highest multiple since 2007 and well above its 10-year average of 24. Apple is among the 50 richest stocks in the S&P 500, which trades at a headline multiple of 19, Bloomberg notes.

The stock had gained another 1.4% in Tuesday trading as of this writing. It surged to a record in late July amid reports of Apple’s push into the smart home market and investor skepticism about the heavy AI spending that Apple has avoided. Since then, however, the stock has been basically flat, Bloomberg points out. Apple has gained almost 27% year to date, making it the top performer among the Magnificent Seven tech giants.

The high valuation partly reflects Apple’s unique position in the AI trade: the company is insulated from the risks associated with massive spending on the technology but is considered one of the key beneficiaries of its development. The elevated multiple also reflects investors’ high expectations for new CEO John Ternus and hopes that he can generate growth by upgrading and expanding the company’s lineup of devices, Bloomberg writes.

Most Wall Street analysts covering Apple recommend buying the stock, according to MarketWatch data: it has 27 “buy” calls versus 13 “hold” and five “sell” ratings. The average target price of $337.18 per share is $7 below the current market price, with the stock trading at around $344 per share on Tuesday.