Apple May Advance Into the Metaverse. But AI Could Be Its Game Changer.

The tech giant is expected to unveil a virtual-and-augmented-reality headset at its Worldwide Developers Conference, which begins Monday. Of course, it could just be a hedge against the concept actually being the next big thing—and therefore enabling it to compete with Meta Platforms, which had to retrench after going too big too fast.

An Apple product launch is always thrilling for investors but there’s one thing the market is more excited about—AI.

Apple stock has climbed around 40% so far this year and was on track early Monday to surpass its record closing high. And that’s without the company so much as mentioning artificial intelligence recently.

Amid all the hype, the technology giant has remained silent—as if biding its time before a mic-drop moment. The conference would be as good a time as any to unveil an AI strategy, and catapult the stock even higher in the process.

The fate of tech stocks for the remainder of 2023 is looking uncertain, particularly as the AI rally seems to be running out of steam—or at least pausing. Friday’s strong jobs report and rising oil prices driven by OPEC’s latest production cut, point toward higher-for-longer interest rates—something that could suppress tech stocks.

Any big reveal from Apple could offset those concerns.

—Callum Keown

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Developers Conference Expected to Unveil Headsets, AI News

Apple
could reveal a virtual and augmented reality headset at its Worldwide Developers Conference, its first major new product in nearly a decade. The event, which kicks off today and features a speech by CEO Tim Cook, is a “flex the muscles” moment, Wedbush Securities analyst Dan Ives said.

• Ives expects Apple’s “Reality Pro” headset to cost about $3,000, and feature lighter materials and Apple’s M2 chips. The new product could hit shelves later this year, though mixed-reality wearable devices haven’t gained mass appeal. Apple didn’t respond to requests for comment.

• At a price between $2,000 and $3,000, it would be one of the most expensive AR/VR headsets.
  Meta Platforms
  ‘ Quest 2 and Quest Pro sell at $399.99 and $999.99, respectively. Goldman analyst Michael Ng estimates Reality Pro could add $11 billion to $20 billion in annual revenue.

• Among other potential launches at the conference this week, Apple will likely announce several new MacBooks—most notably a 15-inch MacBook Air, its largest screen format available. Ives expects an iPhone 15 this fall.

• Apple stock has rallied 39% this year, boosted by artificial intelligence hype, stronger-than-expected iPhone sales in its latest quarter, and its new multiyear, multibillion-dollar agreement with
  Broadcom.
  That beats the Nasdaq Composite, which is up 26% this year.

What’s Next: Ives is expecting Cook to outline Apple’s AI strategy, and how it can integrate the technology, including its own AI-driven solution that will be integrated into Apple products and allow consumers to further tap into their iOS data, video, music, applications, and Apple devices.

—Karishma Vanjani and Janet H. Cho

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Saudi Arabia Adds Production Cut at Tense OPEC+ Summit

Saudi Arabia is cutting oil production by another one million barrels a day in July as the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to stick to their current oil-production target through 2024. Producing nations meeting in Vienna clashed over slowing global energy demand. The oil price jumped in early trading Monday following the news.

• Top oil-producing nations known as OPEC+ met amid growing tensions between Saudi Arabia and Russia over a previous agreement on production cuts. Russia’s continued pumping of cheaper crude has added to a global surplus and undermined Saudi Arabia’s efforts to boost energy prices, The Wall Street Journal said.

• OPEC+ in October slashed output by two million barrels a day, despite the U.S. asking Saudi Arabia and its allies to increase production to help cut energy prices and high inflation. In April, some members, including Saudi Arabia and Russia, cut an additional 1.6 million barrels a day.

• Oil prices have dropped sharply since October. Brent crude, the global benchmark, has dropped more than 20%, to around $78 a barrel, amid worries over the global economic outlook. April’s cuts initially boosted prices, but gains were soon erased, MarketWatch reported.

• Saudi Arabia could extend the cut after July, but won’t say now whether that will happen, Saudi’s Energy Minister Prince Abdulaziz bin Salman said, Bloomberg reported. The cut announced Sunday brings Saudi’s production to nine million barrels a day in July, the lowest level since June 2021, the report said.

What’s Next: Saudi officials and others say Riyadh’s budget needs crude at an estimated $81 a barrel to break even. Saudi economic advisors have warned senior policy makers that the kingdom needs higher oil prices for the next five years to keep spending on ambitious projects, the Journal reported.

—Janet H. Cho

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Spider-Man Nets $120.5 Million, Second Highest 2023 Opening

Sony Pictures’ Spider-Man: Across the Spider-Verse vaulted to an unexpectedly strong $120.5 million in North American ticket sales on its opening weekend, more than tripling the 2018 original’s box office debut. It notches a second-straight week of blockbuster premieres for Hollywood studios and theater chain operators.

• Spider-Man trailed
  Nintendo
  and Universal Pictures’ Super Mario Bros. Movie, which now has surpassed $1.3 billion in ticket sales. Including international sales, Spider-Man raked in a total of $208.6 million. It cost $100 million to make, about half an average live-action comic-book movie, Associated Press reported.

• The second in a three-part trilogy, Spider-Man drew an estimated 56% of all weekend foot traffic, 60% male and 40% female. Audiences paid an average of $13.39 for adult tickets and $11.16 for children, with 29% paying about $4.52 more to see it in a premium format, EntTelligence reported.

• Walt Disney’s
  live-action The Little Mermaid swam into second place this weekend, with $40.6 million domestically, increasing its total take to $326.7 million on its second weekend, according to Comscore. 20th Century Studios’ The Boogeyman was third at $12.3 million.

• So far this year, domestic box office sales have reached $3.6 billion, which is 21.9% lower than before the pandemic, according to Comscore. The 2023 ticket sales thus far are nearly 28% higher than the same period last year.

What’s Next: Hollywood’s major studios and streamers have reached a three-year tentative labor deal with the Directors Guild of America union, including raises, higher streaming royalties, and an acknowledgment that artificial intelligence can’t replace union members. A separate Writers Guild of America strike continues.

—Janet H. Cho

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Amazon Denies Wireless Ambitions. Wall Street Has Its Doubts, Too.

Amazon.com
denied a Bloomberg report it could be getting into the wireless communications industry, and several Wall Street analysts pointed out that such a move would present challenges for the e-commerce giant, not least of which is heavier regulation, this time from the Federal Communications Commission.

• Bloomberg reported Amazon was talking with carriers including
  Verizon Communications,

  T-Mobile US,
  and
  Dish Network
  about offering Prime members wireless plans for $10 a month or free. Talks also included
  AT&T
  for a while. The plan could still be scrapped, the report said.

• Verizon and T-Mobile also denied anything is happening. T-Mobile said: “Amazon has told us they have no plans to add wireless service.” Amazon’s said they “don’t have plans to add wireless at this time.” Dish didn’t respond to a request for comment, and AT&T declined to comment.

• MoffettNathanson analysts Craig Moffett and Michael Morton said customer information is more tightly regulated in telecom than in related industries, adding more risk to Amazon’s existing regulatory worries. “Even a minimal risk like this would be a deal breaker, in our view,” they said.

• Dish would also have challenges, the analysts said. Dish has coverage in 120 cities but not New York, Chicago, Los Angeles, Washington, or San Francisco. It would need reseller agreements with AT&T and T-Mobile to extend its coverage, but access to a third party likely wouldn’t be allowed.

What’s Next: Analysts were also skeptical that AT&T and other telcos would let Amazon into the wireless industry “hen house.” But Amazon is exploring more benefits for Prime members in a bid to grow subscribers. MoffettNathanson notes it has signed up about 80% of U.S. households.

—Liz Moyer and Eric J. Savitz

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MarketWatch Wants to Hear From You

How does the debt ceiling deal that President Joe Biden signed into law over the weekend affect student loan payments?

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to [email protected].

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner