Investors in Apple Are Getting Restless Over AI

Thu Feb 29 2024
Rajesh Sharma (2060 articles)
Investors in Apple Are Getting Restless Over AI

The subject of what Apple is doing about generative AI has been posed time and time again to Tim Cook, Apple’s chief executive officer. His response was: Keep watching.

The investors’ patience is wearing thin.Zacks Investment Management client portfolio manager and Apple shareholder Brian Mulberry stated, “Apple really hasn’t made a big splash in the AI space yet.” For the most part, investors are giddy about artificial intelligence. The majority of the market’s momentum is being driven by AI.

Because of this view, nearly all investors were enthusiastic by Apple’s decision to discontinue its electric-car project and shift some personnel into artificial intelligence on Tuesday. This project was one of the most anticipated possible tech products in a decade. A 1% increase in stock price is an unusual indicator following the decision by one of the most inventive organizations in the world to abandon a bold gamble.

Just like he has done on every quarterly earnings call for the previous year, Cook sought to address investor worries once again on Wednesday.

During the annual shareholder meeting, he made the statement, “We’ve been investing and innovating in AI for many, many years.” He went on to mention other areas where Apple has previously implemented the technology. In addition, he mentioned that they are now investing heavily in generative AI since they “also see incredible breakthrough potential for this area.” It is widely believed that during its annual developer conference, which takes place in June, Apple will unveil new software capabilities that incorporate generative AI.

Out of all the major IT companies, Apple had the worst stock performance last year, despite being one of the most beloved stocks held by famous investors like Warren Buffett for years. A combination of factors, including a decline in the company’s flagship iPhone sales and an absence of innovative AI technologies, has contributed to this situation.

“AI is the topic du jour,” remarked David Wagner, a portfolio manager at Aptus Capital Advisors, a firm affiliated with Apple. Narratives, rather than facts or figures, seem to dictate market behavior these days. “Everyone wants Apple to have a story,” everyone is saying.

Microsoft appears to be well-positioned to retain its position as the most valuable corporation in the world, surpassing Apple earlier this year. Being the biggest investor in OpenAI, the startup that developed ChatGPT, Microsoft has positioned itself as the leading tech company in generative artificial intelligence.

Over the past year, Microsoft’s stock has climbed by over 60%, whilst Apple’s stock has increased by over 20%. Gains of more than 100% have been recorded by Nvidia, the market leader in AI chips.

Launching Siri in 2011, Apple was an early player in consumer-focused artificial intelligence technologies; however, the business has since lagged behind. When compared to other voice assistants from Google and Amazon, Siri fell short in terms of utility and accuracy. The creation of increasingly sophisticated models was impeded by Apple’s rigid attitude on data protection.

In 2018, Apple brought on John Giannandrea, formerly of Google, to head up the company’s AI projects. As an indication of the growing importance of Apple’s technology, Giannandrea reports directly to Cook as a senior vice president at Apple. Although he has been at Apple for a while, the company has yet to make any major announcements like its competitors.

Phones made by Android rivals have started to include new AI features. The newest high-end Galaxy phones from Samsung Electronics, a rival smartphone maker, use cutting-edge generative AI to do things like edit photographs, summarize notes, and translate languages in real-time during phone calls.

According to analysts and investors, it is uncertain whether Apple’s new artificial intelligence features can significantly boost sales, even if the company manages to introduce them and becomes more competitive in this industry. Adding new capabilities is essential for staying competitive with Android, but it’s doubtful that it will spark a new wave of device sales.

Creative Strategies’ chief analyst Ben Bajarin stated, “I still struggle with how early we are in AI.” Our client is a consumer technology research organization. In spite of everyone’s claims to the contrary, “none of this feels revolutionary yet” when it comes to consumer AI.

The Vision Pro is Cook’s flagship new product, but experts predict it will be years before it can generate substantial money. With the mapping of three-dimensional areas, artificial intelligence already plays a crucial role in the headgear.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.