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FILE - In this June 16, 2020, file photo, the sun is reflected on Apple's Fifth Avenue store in New York. Apple on Monday, Sept. 15, 2020, provided a glimpse at upcoming software changes designed to make the iPhone even easier to use and also announced a long-anticipated shift to a new type of chip to power its line of Mac computers.  (AP Photo/Mark Lennihan, File) (AP)
FILE - In this June 16, 2020, file photo, the sun is reflected on Apple's Fifth Avenue store in New York. Apple on Monday, Sept. 15, 2020, provided a glimpse at upcoming software changes designed to make the iPhone even easier to use and also announced a long-anticipated shift to a new type of chip to power its line of Mac computers. (AP Photo/Mark Lennihan, File) (AP)
wsj

Apple’s stock depends on iPhone that wasn’t there

Solid updates to iPad, Watch and services don’t change stock’s dependence on 5G iPhone hype

Such is Apple Inc.’s fate that even solid updates to businesses worth nearly $107 billion a year in sales aren’t quite enough.

Apple announced new iPads, Watch models and a bundled subscription service on Tuesday. The new iPad Air gets the company’s most advanced processor and starts $100 higher than its predecessor, while two new Apple Watch models beef up both the top-end and midrange options for that product family. The new services offering called Apple One bundles several of the company’s growing range of services under single price points. Combined revenue for iPad, wearable devices and services is expected to total $106.5 billion for Apple’s current fiscal year that ends later this month.

That’s still only around three-quarters of the revenue generated by a single product—the iPhone. As expected, Tuesday’s event broke with Apple’s past product cadence by not including an update to the iconic smartphone. That’s presumably because Apple likes keeping its product announcements close to shipping dates, and production on this year’s flagship iPhone designs was delayed by the pandemic. The new lineup is widely expected to be ready around late October—about a month later than normal—which means Apple is likely to hold another event soon to tout it.

That unveiling can’t come a moment too soon for investors who’ve bid up Apple’s market value to a record-busting $2 trillion, largely on hype for a 5G model that some expect to spark a new “supercycle" in sales. The stock has cooled 14% from its Sept. 1 peak, including some weakness Tuesday immediately after the event. But Apple’s shares still trade at nearly 32 times forward earnings—nearly double their multiple before last year’s iPhone launch event.

That keeps the bar high for Apple. New iPads and Watches will likely sell well in a more health-conscious world still stuck working at home. But investors have dialed up big hopes for the next iPhone, and may have a tough call to make once the mystery is out.

Write to Dan Gallagher at dan.gallagher@wsj.com

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