Apple still has time to strengthen its AI race – Janus Henderson’s Richard Clode

Apple (NASDAQ:AAPL) faces significant challenges despite posting impressive quarterly numbers, said Richard Clode, Janus Henderson Investors portfolio manager.

In an interview with CNBC, Clode noted that Apple (NASDAQ:AAPL) and other major tech companies have beaten expectations and received positive earnings revisions, yet their stock performance has been disappointing. Apple’s shares – -2.2% on Friday – have dropped nearly 19% year-to-date, reflecting investor concerns about the company’s future.

“Tim Cook and team probably feel a little bit sore today after putting up those numbers,” Clode said.

He identified several factors weighing on Apple’s stock (AAPL), including the impact of tariffs that could significantly affect the company’s cost structure and pricing strategy. Clode specifically mentioned $1B of tariff costs that don’t even include upcoming Section 232 tariffs.

The technology investor also pointed to the Department of Justice ruling with Alphabet (GOOG), (GOOGL) coming in early September as a potential threat to Apple’s (AAPL) strong services growth. Additionally, Apple’s perceived lag in artificial intelligence development compared to competitors has created uncertainty about the company’s future direction. “The market’s very much debating what is this company’s future in an AI world, and very much seen as a laggard.”

Despite these challenges, Clode believes Apple (AAPL) still has time to strengthen its AI strategy. He referenced Apple’s approach to innovation, paraphrasing Tim Cook’s philosophy that Apple isn’t always first to market but ultimately delivers better products.

Clode suggested that Apple (AAPL) could pursue more aggressive capital expenditure and potential M&A activities, possibly even exploring partnerships with companies like Alphabet once regulatory issues are resolved.

He also warned that Apple needs to demonstrate progress in its AI initiatives within the next year to avoid further market devaluation.

“If we’re in the same place a year ahead from here, we go to another WWDC (Apple’s Worldwide Developers Conference) without too much innovation, the market’s going to get more worried and keep derating the company,” he cautioned.