“Apple AI expectations peaked following the June 2024 announcement of Apple Intelligence, which positioned AI as having a quick impact on growth. In the end, the most important AI features never shipped, leaving Apple with a black eye and resetting how the company communicates upcoming AI features,” longtime Apple analysts Gene Munster writes for GeneMunster.com. “Since last summer, Apple’s AI communication strategy has been say less and show more. While consistent with Cook’s execution first philosophy, this approach has left investors wanting more, especially as other Mega Cap Tech peers aggressively detail how AI is reshaping their businesses.”
Gene Munster for GeneMunster.com:
On the [company’s Q126 conference] call, Cook reiterated that a new Siri, effectively shorthand for next generation Apple Intelligence, is coming this year, but provided no additional details. References to collaboration with Google’s Gemini were positive but lacked substance. Apple also made no mention of its recently reported $2B acquisition of an Israeli AI audio company, which could have served as a tangible signal of progress across AirPods, iPhone, or future wearables.
The result is a widening gap between thrilled customers and frustrated investors. Customers are more than satisfied, as evidenced by device growth, margins, and revenue momentum into March and June. Investors, however, remain in wait and see mode on AI. Until Apple provides clearer substance or demonstrates its capabilities in market, I expect this tension to persist, even as fundamentals continue to perform.
MacDailyNews Take: Based on results and, more importantly, very strong guidance, Apple stock should be well above $300 by now. It’s held back, as it’s always been held back, by an underwhelming caretaker CEO who’s long past his sell-by date, who lacks charisma, who totally missed the generative AI revolution, and who fails to generate even a modicum of excitement about the company’s future.
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Knock on wood…so far, AAPL has held up INCREDIBLY well during the drop of the last few days.
What hasn’t held up very well is Cook’s statement that the new AI Siri…driven by Gemini, will be hosted on AAPL servers and info controlled by AAPL. Some reports say otherwise.
Siri related info controlled/held by GOOG is about as concerning as it gets.
This is pure bullshit.
‘AI messaging’ is NOT holding back AAPL. The ABSENCE of AI is holding back AAPL.
You really think better PR messaging would cure AAPL’s woes? Get real.
AI is not holding back AAPL’s price. The P/E is 35. I don’t see it going much higher than that. Before the earnings call the P/E was also ~35. After the big increase in E the P/E went down a bit then the price (P) increased and we are back to ~35.
Guidance for this quarter was good. Once we see that the earnings for this quarter are good then I think the P/E will increase. I think investors are actually OK with Apple’s approach to AI. Not like Microsoft spending like a drunken sailor or even worse, Oracle maxing out the credit card.
Oracle is on its way to a 2/3 drop from its recent high. Apple is on the edge of setting a new high. Which would you rather have?
The issue is not “messaging” in any way shape or form.
The issue is lack of leadership and lack of an exciting plan.
Just recently I spoke with principals of a few development groups that are able to get tier A people for 1/4 to 1/2 the “going rate” for these people because they were able to articulate to these people a vision of where they want to eventually be (NOT a “message”) and plan to get there. Because of that these people were willing to join at such reduced salaries and be part of the process to get from “here” to “there”.
Apple has no real vision with regard to any of the pieces that go into what people are calling “AI”. This is the crime. It has nothing to do with “messaging”. You can’t develop a “message” until you know what you are going to do.
It’s OK for the Chairman and CEOs to be able to stand on a cliff and see another cliff in the distance to which they need to go, but they need to see that far away cliff. These leaders can then turn to the team and say, “That’s where we need to go. Let’s create a plan to get there and start executing it.” The problem with Apple is that with regard to “AI” the senior leadership can’t see that far away cliff. Even with other companies talking about what they seem to think is the far away cliff, Apple’s senior management hasn’t a clue.