Apple Inc. executives have long maintained that the don’t talk about forthcoming offerings before they’re ready, and they mentioned that view again Thursday afternoon.
“Our M.O., if you will, has always been to do work and then talk about work and not to get out in front of ourselves,” Chief Executive Tim Cook said on the company’s earnings call. Apple
AAPL,
was going to “hold that” standard to the topic of generative AI as well, he added, in response to an analyst’s question on the company’s AI plans.
See more (from August 2023): Apple’s Tim Cook explains why he won’t showboat around AI
But there was a bit of a twist this time, as Rosenblatt Securities analyst Barton Crockett noted. Cook went on to say that the company had some “things” going on with generative AI “that we’re incredibly excited about that we’ll be talking about later this year.”
While the company “didn’t provide any detail,” it was an “unusual move for this company” to tease an upcoming product event, wrote Crockett, who has a neutral rating and $189 target price on Apple’s stock.
Apple has been far quieter about AI than it’s Big Tech peers, and perhaps management realized that investors were looking for a little more. “A muted AI storyline at Apple, versus explosive developments elsewhere, has been a sentiment headwind for the shares,” Crockett wrote.
Those shares were looking to be under pressure again Friday, after the company missed expectations with China revenue for its latest quarter, feeding into another investor concern. Apple also gave overall guidance for the March quarter that disappointed. The stock was off about 3% in premarket trading.
Evercore ISI analyst Amit Daryanani, however, advised investors to “look past the March noise” and focus instead on factors like the impending generative AI announcement and the growth in Apple’s installed base of devices.
Though he could see why investors found Apple’s outlook underwhelming, he sees “largely flat” iPhone units sales when excluding certain one-time factors.
“More importantly, we see a host of tailwinds stacking up in [Apple’s] favor
ranging from Gen AI product launches to Vision Pro adoption to sustained [free-cash-flow] generation/uptick to capital allocation,” he wrote, while reiterating his outperform rating and $220 price target.
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Needham’s Laura Martin wrote that over the long term, she and her team “believe companies that use [generative AI] to cut costs and accelerate new product launches will replace those that don’t.” Her question now: “Which is AAPL?”
She further noted that because of the company’s “very sticky” ecosystem, Apple “historically has been able to be a fast follower of other companies’ innovations.”
“We do not expect this to change, although annual product upgrades feel like slow motion in an environment where [generative AI] is rapidly changing the basis of competition,” she added, while maintaining her buy rating and $220 target price on the stock.
Raymond James analyst Srini Pajjuri was optimistic about what newer areas could do for Apple.
“Any contribution from Vision Pro,” the company’s just-launched $3,499 mixed-reality headset, “is essentially upside to our model,” he wrote. “In addition, commentary suggests that Apple will unveil Gen AI features later this year, which could help shorten replacement cycles and drive incremental Services opportunities.”
He has an outperform rating and $195 target price on the stock.
