Google, Microsoft, Meta, OpenAI, and others had aggressively invested in infrastructure that was deemed necessary to carry the wave of artificial intelligence. During the same period, Apple was believed to have taken a backseat, with its stance met with incessant criticism by analysts and investors, who stated time and time again that Apple was falling far behind in the race.
Now, one analyst believes that sentiment has changed because, unlike its competitors, the company has not only reduced capex intensity risk but also made its position invaluable for opening another revenue stream through its robust Services division. This advantage, in turn, should allow for increased hardware upgrades, making it quite a unique turn of events for Apple because demand for PCs and smartphones has waned due to the RAM shortage.
Unwillingness to invest in developing better AI models has rewarded Apple, but the ongoing memory crisis can adversely affect progress
The latest statistics revealed that Apple had surpassed NVIDIA as the most valuable company on the planet, with its market capitalization at $4.88 trillion, while NVIDIA held second place at $4.86 trillion. While the AI boom has rewarded a multitude of companies while introducing uncertainties in the industry, Apple would be the last company to obtain any benefit, seeing as how it has barely made any progress in this space.
The iPhone maker only recently introduced Siri AI, a revamped version of Apple Intelligence and a step towards righting its wrongs after it misled consumers into believing that upgrading to the latest iPhones would grant them exclusive generative AI features. Toni Meadows, head of investment at BRI Wealth Management, informed Reuters that the sentiment around Apple’s position has changed.
Instead of being viewed as an entity that’s at a severe disadvantage because it’s not spending top dollar in developing newer AI models, Meadows states that Apple won’t be under the same pressure as other hyperscaler firms that continuously need to inject billions and billions of dollars in investments to keep up in the AI race. As a result, Apple can bundle AI into its Services sector, which can further lead to increased upgrade cycles.
“Apple was seen as a laggard in the AI race because it wasn’t spending to develop models, but now sentiment has changed. Apple is less exposed to capex intensity and better positioned to monetize AI via services, ecosystem lock-in, and hardware upgrades. The re-rating reflects confidence in earnings durability rather than speculative AI upside.”
Other analysts have argued that Apple possesses personal data that can be transformed into a massive financial opportunity once it allows Siri to access that information. Though it’s likely that the Cupertino firm will keep its hands off this decision in the name of privacy. As a result, Apple will bank on Services and hardware upgrades to perform the heavy lifting, but its iPhone 18 Pro and iPhone 18 Pro Max face lower shipments due to the ongoing shortage.
However, if you noticed, Apple isn’t expected to announce the base iPhone 18 later this year, and according to Citi, demand for the expensive models is more resilient, even during this crisis, meaning that Apple doesn’t necessarily need to leverage AI to extensively contribute to its revenue and market capitalization.
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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