For years, Apple was the envy of the tech world. The Silicon Valley titan drew fame and acclaim for making classy, high-margin, must-have devices. As it blazed a trail in consumer electronics, Apple stock soared. Then came AI.
Suddenly, many in the tech world are asking: What's up with Apple and AI? Where's the iconic trailblazer in what's become the biggest battle in the industry's history?
"With the AI revolution, Apple is on the outside looking in," Wedbush analyst Daniel Ives told Investor's Business Daily. While the S&P 500 has risen 10% this year, Apple shares have shed 8%.
Referring to Tim Cook, now in his 14th year as chief executive of the storied consumer electronics firm, Ives said, "This is an F1 race at Monza in Italy, and Cook is watching it from the stands."
This Formula 1 showdown of tech will shift focus Sept. 9 to Apple Park in Cupertino, Calif., where the company will unveil the latest version of its flagship product.
Apple is launching the iPhone 17 at a frenetic time. Tech giants are scrambling to build expensive data centers to power AI programs. And they're spending small fortunes in a jaw-dropping battle for AI talent.
This brawl is unfolding as a debate rages over the promise and future of artificial intelligence. Among the questions Wall Street is asking: Is Apple getting left behind in the most significant technology trend in decades? What does AI mean for the future of the iconic company that defined tech's direction for so long?
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What Now For The iPhone And Apple Stock?
"This has really opened the door for the first time that I can remember to actually displace Apple," Baird technology strategist Ted Mortonson told IBD.
Apple remains a formidable force in smartphones. But the company's most recent product announcements have been snoozers. Apple Intelligence, which the company unveiled last year, hasn't exactly wowed the tech world. So far, its AI features have been limited to things like photo cleanup and writing tools, not the agentic applications it promised.
Further, Apple's challengers are on a tear to match or even surpass the iPhone's advantages. That's especially true with the rise of AI.
Mortonson cited Alphabet's Google.
"If you look at the new Google Pixel phones, they have the entire stack," he said. "They've got the hardware, they've got Android OS, and they've got the whole AI stack embedded in their new devices."
Gemini AI on Google Pixel phones can do real-time voice translation, fast photo edits, and will proactively surface information when a user needs it.
"It's pretty risky for Apple right now," he added. "It only takes a few influencers to say, 'Hey, the new Google Gemini phone is awesome. It's truly an AI assistant and is changing the way I do my day-to-day life.'"
Apple AI Release Date And The New iPhone
Apple has touted its AI initiatives for the iPhone. But the company suffered a huge black eye when it pushed the release of its AI-powered Siri digital assistant into 2026.
It previewed the next-generation Siri at its Worldwide Developers Conference in June 2024 and had planned to release it by this fall. But earlier this year, Apple postponed the release because it didn't meet its high standards.
Wall Street is getting anxious, which became evident in Apple's last earnings call.
"I wanted to ask about Siri, Tim, and just overall AI investment," Melius Research analyst Ben Reitzes asked Cook during the call. "Just wondering how's your confidence towards launching that next year? I just think folks would love to know a little bit more about your confidence in how that's going?"
The Apple CEO affirmed that the company is "making good progress on a more personalized Siri. … Our focus from an AI point of view is on putting AI features across the platform that are deeply personal, private and seamlessly integrated."
Technical Analysis Of Apple Stock Now
Amid worries about Apple's game plan, sentiment on the stock has been mixed on Wall Street. On a technical basis, Apple stock has been consolidating. It's trading above its 21-day moving average, according to IBD MarketSurge, but it's not near a buy point at this time. On a scale of 1-99, Apple has a mediocre Relative Strength Rating of 53.
Meanwhile, other Big Tech stocks have charged higher on aggressive drives into AI. While Apple stock has roughly paced the S&P 500 since the market bottomed in April, its gains don't offset its losses earlier in the year.
Among the Magnificent Seven tech stocks, Apple's performance is the second worst this year. Most of the Mag 7 megacaps have gains to show, and several of them have sizable ones.
The biggest investor worry is this: Apple AI's underwhelming presence reinforces views that the company is missing out on the biggest technology transition since the dot-com boom of the late 1990s.
Ives of Wedbush has a buy rating on Apple. But he's been critical of Apple's "invisible AI strategy."
He offered a dire warning: Apple has to make progress soon on AI, or risk becoming the next BlackBerry. BlackBerry devices were the hot mobile phone until the iPhone came along and relegated it to the junk drawer.
Apple did not respond to a request for comment for this story.
Apple Stock Performance Vs. S&P 500 And Mag 7
| Stock | Ticker | YTD change* |
|---|---|---|
| SPDR S&P 500 ETF Trust | 10.08% | |
| Nvidia | 29.65 | |
| Meta Platforms | 26.16 | |
| Microsoft | 20.21 | |
| Alphabet | 12.47 | |
| Amazon.com | 5.57 | |
| Apple | -7.30 | |
| Tesla | -17.33 | |
*As of Aug. 29 |
||
Magnificent Seven Stock Performance, 2025
Some Apple watchers downplay worries about the tech giant.
"I think the perception that they're far behind is exaggerated," Louis Rosenberg, CEO of startup Unanimous AI, told IBD. Rosenberg, among others, argues that Apple is simply focused on a different aspect of the AI brawl.
"I think that Apple is thinking about this in a different way," Rosenberg said. It is focused on the consumer experience while others are focused on enterprise applications for AI, he said.
And despite warnings of Apple becoming the next BlackBerry, there's another view. Apple's strength isn't about the iPhone or any of its other devices. An even bigger factor is its ecosystem.
Apple morphed into a tech powerhouse by getting consumers to pony up for peripherals and services in a sticky ecosystem that no company could match.
"Apple's relationship with its consumers transcends the device," Gil Luria, head of technology research at D.A. Davidson, told IBD. "The biggest growth business for Apple is services. It's not the devices."
Power Of The Apple iPhone Ecosystem
Crawford Del Prete, president of the research firm International Data Corp., agreed.
"The iPhone ecosystem is really unlike any other ecosystem in the world," he told IBD. Del Prete cited "the amount of lock-in" Apple enjoys by giving iPhone users access to a vast variety of apps and services.
Apple reported services revenue of $27.4 billion for its fiscal third quarter ended June 28. That was nearly a third of its total revenue of $94 billion. Services became a $100-billion-a-year business for Apple in late 2024.
Still, Apple is grappling with the perception that it is no longer a trailblazing innovator.
"It's not that it's losing its luster," Del Prete said. "It's that, for the last few announcements, that big wow factor really hasn't been there. Do we see their ecosystem struggling or suffering? No. But is there a general perception that customers would like more groundbreaking innovation around the actual physical hardware? Yes."
Yet, Del Prete argued, "I don't think they're running the risk of their customers defecting."
As Tech Pivots To AI, Apple Stock Faces Challenges
But perceptions are growing that the company and Apple stock are vulnerable. And rivals are stepping up.
Facebook parent Meta Platforms is making a bold push into consumer electronics with smart glasses co-branded with Ray-Ban and Oakley. Meta Chief Executive Mark Zuckerberg wants fashionable smart glasses to be the next personal computing platform.
Elsewhere, companies like Amazon and OpenAI are working on undisclosed wearable AI devices.
One problem for observers, especially investors, is that Apple's AI strategy is a mystery, which appears to be by design.
"It's always hard to know where Apple is because they are a lot less communicative about things in development than other companies," Rosenberg of Unanimous AI said. "In the AI space, the competitive companies like OpenAI or Anthropic or Meta, they're talking about things that are in development and aspirational. And Apple just doesn't really do that."
AI Capex Surges, But Not At Apple
Apple also isn't pouring tens of billions of dollars into building massive AI cloud data centers like Big Tech giants Alphabet, Amazon, Meta and Microsoft are.
"There's no need for them to be doing that," CFRA Research analyst Angelo Zino told IBD. "One of the biggest reasons Apple has been able to generate the value it has is because of their asset-light approach."
Instead, Apple will likely leverage other companies' investments for its Apple Intelligence initiative.
"Let those other guys build the data centers," Zino said. "What they need to focus on is being a distributor of AI. It's creating the ability for others to get into the Apple ecosystem and then being able to sell."
Gene Munster, managing partner at Deepwater Asset Management, also thinks the idea that Apple is behind in the AI race is "off base."
"It's not nearly as bad as the headlines would suggest," Munster told IBD.
Siri, AI And Unlocking Value For Apple Stock
"Apple has got this incredible ecosystem," Del Prete said. "They've got this underutilized thing called Siri and they need to figure out how to apply AI to that experience to unlock value and monetize in a new way. They have yet to do that."
Pushing back the release of the revamped Siri was an embarrassment. But Munster said Apple wants to make sure that it is something unique and useful, not just a better chatbot.
Apple likely will lean on partners to catch up in the AI race, analysts say. It already has a partnership with OpenAI to integrate ChatGPT and other AI technologies into its ecosystem.
"I expect them to address AI via more partnerships or expanded partnerships," Zino said.
Apple reportedly is negotiating with Alphabet's Google to use its Gemini AI technology to give the Siri digital assistant a brain transplant.
Will M&A Fill The Apple AI Gap?
Questions about Apple's game plan have sparked speculation that the tech giant may turn to M&A to close the AI gap with Big Tech rivals.
"Cook is really prudent in terms of the acquisitions he makes," Munster said. He noted that many people predicted Apple would buy a movie studio as it was preparing to launch its Apple TV+ subscription streaming video service, but that didn't happen.
Some pundits have been pushing Apple to buy AI search engine Perplexity, which has a valuation of about $20 billion.
"I think that's worth serious consideration," Del Prete said.
But an M&A offensive could be tricky when a battle is underway for AI talent.
Acquiring a company for its AI talent can be problematic because the workers can get poached by other companies. Apple already has lost key AI engineers to Meta and other companies.
Why Apple AI Doesn't Have To Be The Early Leader
"For a lot of these companies, the assets go home every night," Del Prete quipped. "There's a finite number of elite engineers and technologists that exist who really understand this stuff. Zuckerberg is basically saying, 'I want them to be carrying a Facebook badge because that's going to help me differentiate and give me a sustained advantage.'"
But Apple has the means to play that game, Rosenberg of Unanimous AI said. "There's an arms race happening."
And it promises to be a long race, which could be an advantage for the company and Apple stock.
Apple has been known to do well in tech marathons. The company was outpaced for a time by IBM, Hewlett-Packard and Dell in personal computers before roaring back. Other companies, like BlackBerry, led the way in mobile computing, but Apple grabbed the lead with the iPhone.
"Apple isn't known for being first to any innovation," Luria said. "Apple is known for incorporating innovation that comes from other places in a way that its consumers are delighted. And that'll be the case here as well."
Apple Fumbles AI Lead
Apple arguably had a head start in AI for the consumer electronics market. But the company lost that lead.
"Apple was an early pioneer in bringing out voice assistants in a conversational interface with Siri," Del Prete said. "Frankly, they got lapped."
But Luria of D.A. Davidson noted that the battle for AI dominance is still "very early," so "Apple has time."
Take smart glasses, an emerging space where Meta appears to be taking an early lead.
"As long as they come out with Apple glasses before the product is ubiquitous, they'll be fine," Luria said.
Promise Of Apple Intelligence
Apple doesn't need the most comprehensive set of AI functions to succeed, he said.
"Apple just needs to have enough AI capabilities on its devices to be competitive in that regard with Android devices," Luria said. "They're really comfortable leveraging the progress that other companies are making in order to do that."
Once Apple Intelligence is fully baked into its devices, the company can let its legion of developers make exciting AI apps for the iPhone, CFRA's Zino said.
AI has the potential to "supercharge" Apple's App Store, he said. And Apple will share in the revenue generated by sales of third-party apps and services.
That will likely not happen with the launch of iPhone 17. But Apple needs to get AI Siri and a more robust Apple Intelligence on the market by WWDC 2026 next June, Zino said.
"That's the absolute latest that Apple can deliver on that," he said.
