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Apple (AAPL) shares are down 12% for 2024 to date as of March 5. But I don’t think Apple’s troubles are over. And it will take some pretty fast talking at the June WWDC (World Wide Developers Conference) to reverse the downtrend in the shares. Absent a knock-it-out-of-the-park performance from CEO Tim Cook, I think the weakness will continue until the company’s product announcements in September. And maybe longer.

Those of you who have long memories may recall that I sold my shares of Apple in my 12-18 month Jubak’s Picks Portfolio back on September 12, 2023 at $176.30 a share. (I kept my long-term position in Apple in my 50 Stock Portfolio.) That sell turned out to be early. Painfully early. The stock hit a 2023 high of $198 on December 14. And it has only recently moved below my September sell, closing at $169.12 on March 6.

But the iPhone China problem that led to that sell call has gotten worse.

And since then Apple has developed an AI problem as well.

And unfortunately the China problem and the AI problem mix to form an especially potent negative brew.

Apple got hit with more bad iPhone news from China on March 5. Counterpoint Research reported that iPhone sales in China were down 24% year over year in the first six weeks of 2024. That looks to be at least partly a result of the Chinese government targeting the iPhone with new “security” regulations to discourage the use of iPhones at work in China. But the report looks especially grim since smartphone rival Huawei reported a 60% surge in unit sales. The iPhone certainly seems to be fighting “buy China” headwinds in this vital market for Apple.

The other source of downward pressure on the stock comes from a perception among U.S. investors that Apple is late on bringing artificial intelligence to the iPhone. Samsung has already added AI features to its just launched model. Apple, on the other hand, hasn’t yet put any stakes in the ground about when it will add AI capabilities to the iPhone.

The June developers conference will be Apple’s next big chance to address that perception. A raft of new tools for developers to add AI features to programs running on the iPhone would demonstrate the company’s commitment to catching up. And strong verbiage from CEO Cook on coming AI features in the iPhone operating systems would also address the problem.

A strong performance at the developers conference could put some pop back in the stock.

But it wouldn’t end the problem.

Apple finds itself facing a vapor-ware crunch of its own making that will almost certainly depress iPhone sales in China and in the United States in the short run.

You remember vapor-ware, don’t you? It’a tried and true software industry tactic for keeping competitors out of your markets. A company, let’s say Microsoft (MSFT), a past master of vapor-ware, would announce a coming product months before that product would actually hit the market. But the mere announcement would freeze some competitors in place while they waited to see what the Microsoft product would actually look like.

Apple has a similar problem with the AI features that everyone knows are coming soon to a new iPhone. Some percentage of the very loyal iPhone customer base will delay their next upgrade to a new iPhone because they want to get all the new AI features that they are sure are coming.

In other words, Apple’s need to add AI to the iPhone will have the effect of reducing upgrade sales until the AI-iPhone is available for purchase. We ought to get word on Apple’s AI-iPhone plans around the time of the developers conference.

Here’s how I see Apple shares behaving over the next few months. The stock is likely to retreat farther on the next earnings report (around April 24 of so) on weak sales in China–and on pessimistic guidance on that market. The stock could then rally near the June developers conference on hopes that Apple will make a big AI splash. Then I‘d expect more weakness over the summer on continued negative news on China iPhone sales. And then there’s the potential for a fall rally if Apple’s product announcements include a strong AI emphasis. The December quarter, remember, is always Apple’s strongest quarter.

And that’s my guideline for selling and buying Apple over the next six months.