The Apple (NASDAQ:AAPL) announcement of at its WorldWide Developer Conference in June was a turning point for the industry.
Shares have jumped 18% since the announcement. Apple is once again the most valuable company in the world, with a market cap of nearly $3.5 trillion.
Of more significance to the industry and the markets, is that Apple Intelligence isn’t AI. Not as the market has defined it since OpenAI’s ChatGPT announcement
But what’s bad for the AI industry can still be seen as a boon for the House of Cook. Here’s why.
Apple Is the Interface Company
Apple has always been an interface company. This has been true since it was founded almost 50 years ago.
Each interface has been a revolution. There was the Apple II’s typewriter-and-television screen, then the Macintosh’s mouse-and-windows and finally the iPhone’s app-and-touchscreen.
Voice will be Apple’s next interface. Voice unifies Apple’s product line around data users have already accessed or saved on iCloud. Think of it as connecting the dots of your life and time.
It will take time to set this up, even for Apple. The next version of iOS 18 many Apple Intelligence features. Those won’t be available in software until . The new software is .
That means Apple Intelligence of the iPhone 16. There will be improvements, there always are, but expect sales of Apple’s leading device to be flat. Customers will be .
This doesn’t mean users can expect nothing from Apple until next year. Apple will bring out Priority Notifications to its iPhone this fall, . If you’ve ever forgotten an appointment and rushed out the door, only to find out the appointment was tomorrow, you’ll love this.
Why Are We Cheering?
The vision of Apple Intelligence is that it will output but all the pictures, movies, and snippets Generative AI is capable of. However, the language model it will be built on will be your data. The hardware it will run on will be on your desk or in your hand.
Yet because Apple has sidestepped the problems of ChatGPT and its competitors. Apple has rights to the data because it’s your data. Apple doesn’t need to wear out Nvidia (NASDAQ:NVDA) servers because its models run on your hardware.
The latest rise of Apple, then, is a rejection of its competitors. The promises of Large Language Models (LLMs) . Even Sam Altman, who runs OpenAI, admits that ChatGPT 4 is sub-optimal (He used with Fortune).
What’s clear to analysts now is that innovations are needed on the software side, in the algorithms, for AI to achieve its promises. Nvidia hardware has gotten ahead of what AI software can do. isn’t working.
Given that backdrop, Apple represents a safe pair of hands for tech investors. Apple has become . It has paid dividends since 1987 and has gone through five stock splits, most recently in 2020. The dividend is up by 25% just since that split. If you bought some Apple shares as a young tech reporter and just hung onto them, you’re rich, dude.
The Bottom Line on Apple Stock
What analysts most admire is CEO Tim Cook’s cost discipline. Having pushed streaming TV for five years, with little to show for it but industry awards, he’s and seeking a profit from it.
Cook has made Apple , a stock with steady gains and a reasonable bet on the future. Sanity is very sexy, don’t you think?
As of this writing, Dana Blankenhorn had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
has been a financial and technology journalist since 1978. He is the author of , available at the Amazon Kindle store. Write him at , tweet him at , or subscribe to his .
