Do product launches move tech stocks? 📱

On Sep. 9, Apple (AAPL) hosted its latest product launch event. It unveiled several new iPhone and Apple Watch models, plus a new version of its AirPods earbuds.

It was one of the busiest Apple events of the last two years, in terms of the number of new products announced. And over the next week, it sent the price of Apple shares soaring by… less than half a percentage point.

When I look at Apple’s one-week returns after the last seven Apple events, I see a variety of numbers — some positive, some negative, some big and some small.

It’s hard to draw any conclusions from Apple’s one-week returns after its product launch events. But what does science say about product launches and stock prices?

A 2024 study by Dr. Jenny Chu, an accounting professor at the University of Cambridge Judge School of Business, looked at thousands of new product announcements, or NPAs, among publicly-traded U.S. companies between 2001 and 2016.

Chu found that NPAs were generally predictive of stock price increases. (This is technically also the case for Apple over the last two years — on average, Apple shares rose by 1.93% in the week after an Apple event.)

However, Chu also found that a variety of factors influence the market’s reaction to an NPA. The positive effect was weaker, for example, when managers could enrich themselves by selling company stock after an announcement, as this can create conflicts of interest.

Perhaps more importantly, Chu found that the newness of a product featured in an NPA has a big effect on the stock market’s reaction to it. “Our research shows that a higher level of innovation disclosure in an NPA is linked to a greater stock market reaction to the information,” Chu wrote.

In other words, the newer a new product is — the more unprecedented it is, compared to what’s already on the market — the bigger the upside for the company’s share price.

Chu’s research provides some interesting context to Apple’s most “bullish” event of the last two years. On June 10, 2024, the company unveiled Apple Intelligence, an AI assistant that is integrated into the operating systems of its latest iPhones, iMacs and MacBooks. Over the following week, Apple shares rose by more than 10%.

Apple did not invent AI assistants, but Apple Intelligence does stand out as the first AI assistant that is natively built into a mass-market phone or computer.

So should Apple shareholders get excited for future AI product launches?

Maybe. Consumer AI certainly has a lot of potential. But as I discussed in a recent episode of NerdWallet’s Smart Money Podcast, a growing chorus of experts — including OpenAI CEO Sam Altman — have raised concerns in recent weeks that the AI stock boom is starting to look like a bubble.

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Neither the author nor editor owned positions in the aforementioned investments at the time of publication.