Investing.com -- Shares in Apple (NASDAQ:AAPL) inched lower in premarket US trading on Tuesday after the tech giant revealed the latest artificial intelligence-enhanced iterations of its flagship iPhone and the European Union's top court ruled against the company in a years-long legal battle regarding its taxes in Ireland.
The Cupertino-based group announced a slew of enhancements to its iPhone 16 on Monday, including improvements to its Siri voice assistant and a range of smart camera customizations aimed at professional video editing that are due to rolled out over time. Apple is banking on the iPhone 16, which is due to go on sale on Sept. 20 with pre-orders available this Friday, to help reinvigorate flagging sales of the device.
Analysts said the new iPhones and AI features largely met expectations set by Apple’s earlier reveal of its plans for a push into AI, called “Apple Intelligence.”
Analysts at Jefferies argued that Apple needs to offer more aggressive trade-in prices to entice customers into upgrading to the new iPhone. Jefferies added that Apple’s AI features will spur only a gradual acceleration in sales, and that expectations for a near-term sales rebound were likely to cool.
Meanwhile, analysts at Evercore said Apple’s new reveals, particularly on AI, were a “more polished version” of the firm’s announcements during its closely-monitored developers conference in June. The brokerage also flagged that Apple’s staggered AI rollout could “elongate” a replacement cycle for the iPhone, but still keep overall sales growth positive.
Analysts at Wedbush struck a far more positive tone, stating that the new AI features were likely to spur strong sales growth over the “next 12 to 18 months.”
However, some analysts warned that the new features will be released gradually, possibly detering immediate buyers, especially amid tough competition from rivals such as Samsung (KS:KS:005930) and China's Huawei.
In separate event on Tuesday, Huawei unveiled a $2,800 tri-foldable phone -- dubbed the Mate XT -- as it seeks to enhance its lead in China, the world's biggest smartphone market. According to the firm's website, the Mate XT has already received over 3.6 million in pre-orders. The total global market for foldable phones was roughly 4 million units in the second quarter, Reuters reported, citing data from research firm IDC.
Apple, meanwhile, has yet to find an AI partner for China, which is one of its biggest markets. The company has been grappling with a more than year-long decline in Chinese iPhone sales.
EU Court of Justice finds against Apple in Irish tax case
Elsewhere on Tuesday, the European Court of Justice ruled that Apple must repay 13 billion euros in back taxes, overturning an earlier decision that had found in favor of the company.
The EU's top court said that two entities overseen by Apple -- Apple Sales International (ASI) and Apple Operations Europe (AOE) -- had effectively received state aid from Ireland in the form of tax advantages from 1991 to 2014.
ASI and AOE, who were both incorporated in Ireland but not tax residents, were allowed by Ireland to exclude from their tax base profits generated by the use of intellectual property licences held by the entities, the Court of Justice said. Ireland had approved this method because the companies' head offices were located outside of the country and management decisions were taken in the US, it added.
However, in 2016, the European Commission -- the EU's executive branch -- found that this arrangement was "unlawful and incompatible" with the bloc's internal market rules, saying that Apple "as a whole had benefited." The Commission ordered Dublin to "recover" the back taxes from Apple.
The decision was later reversed by the EU General Court in 2020, which ruled that lawmakers had not shown that Apple had received a "selective advantage" in Ireland. The General Court also said the Commission's reasoning was based on incorrect assessments of "normal taxation" under Irish law.
But the Court of Justice said it had set aside that judgement, arguing that the General Court had "erred."
Ambar Warrick and Reuters contributed to this report.