Can Apple AI rally company stock?
Contributor since / Followers
ozgurdonmaz/iStock Unreleased via Getty Images
Apple (NASDAQ:AAPL) released the first set of features for Apple Intelligence with its latest software update, iOS 18.1, this week as the Cupertino, California-based tech giant continues to focus on AI to supercharge its growth trajectory.
However, amid a staggered rollout of its features, the company faces an uphill task to improve sentiment around its stock, which has underperformed this year relative to Google (GOOG) (GOOGL) and Meta (META), some of the aggressive AI adopters among big tech.
Currently available on iPhone 15 and 16 models with limited features, Apple Intelligence is unlikely to see major upgrades until at least December, when the company plans to introduce more capabilities with iOS 18.2.
During the earnings call, Cook said that the early days of Apple’s (NASDAQ:AAPL) AI launch looked promising, noting that “the 18.1 adoption is twice as fast as the 17.1 adoption was in the year-ago quarter.”
Amid the Apple AI launch, some analysts have even placed stronger bets on AAPL’s current quarter. Wedbush’s Dan Ives argued that “a monster holiday season (is) likely on deck” for the company as nearly 300M iPhones globally haven’t been upgraded in more than four years.
However, Morgan Stanley analyst Erik Woodring disagreed. In a research note on Friday, Woodring argued that despite initial signs of consumer interest, “we think it’ll take more time, and perhaps until the end of the quarter when more compelling Apple Intelligence features are rolled out to improve the narrative around Apple Intelligence.”
Additionally, there are concerns over whether the current generation of AI smartphones has the tech prowess to deliver powerful AI features that Apple (APPL) plans to release over the coming months.
“To expect an accelerated smartphone replacement cycle now due to AI is premature, in our view,” Emarketer analyst Jacob Bourne wrote after AAPL’s earnings report. However, “a combination of robust services revenue growth and healthy iPhone 16 demand positions Apple well for the holiday season,” Bourne added.