Apple Unveils Its AI Future Monday Morning
AI can boost AAPL by $40 a share ...
At its Worldwide Developers Conference on Monday, Apple Inc. AAPL 0.00%↑ plans to detail its “AI Future.”
We’ve kept you out front on this crucial story.
In our two “look ahead” reports here at Stock Picker’s Corner (SPC) — a video interview followed by this special briefing — my longtime friend, colleague and Apple expert David G Zeiler made three big predictions:
Apple’s strategy will be “platform-based” — meaning the iDevice King will treat its vaunted “ecosystem” itself as the platform … which it will infuse with AI technology.
The company is nowhere near as far behind as the gloom-and-doomers would have you believe — and this platform strategy coupled with more than 2 billion devices in use will actually become a competitive advantage.
And Apple will soon be back on a growth path — thanks, in part, to what it says today.
We made our predictions early — weeks before the WWDC and well ahead of the Wall Streeters, pundits and self-anointed Apple authorities.
But one analyst whose views we tend agree with weighed in after we did and absolutely sees it our way.
Let’s take a look at what that analyst said — and show you how it fits into our thinking.
Four for Four
We’re talking about Wedbush analyst Dan Ives, whose recent investor note lined up with Dave’s comments in four key areas. In his investor note:
Ives said the “WWDC represents the most-important event for Apple in over a decade … with [CEO Tim] Cook & Co. set to make history for Cupertino [on] Monday.” Dave (earlier) said the WWDC will be a once-in-a-decade “tentpole event” — the term Cupertino uses to signify a major strategic initiative.
Ives said he “believe(s) AI technology being introduced into the Apple ecosystem will bring ample monetization opportunities on both the the services as well as iPhone/hardware front.” Dave predicted Apple would pursue a “platform strategy,” where developers would overlay AI technology on the vaunted ecosystem that includes a massive installed base of iPhones, iPads, MacBooks, Apple Watches and the App Store.
Ives said, thanks to that “installed base” of 2.2 billion iDevices, this crucial AI foray will add $30 a share to $40 a share to Apple’s stock price.” Dave said the new AI initiative, coupled with the misunderstood Apple health foray and the dramatically underrated, $3,500 Apple Vision Pro headset would combine to spark “Apple’s Next Act” — and a resurgent stock price.
In a fourth-and-final comment — which also echoed Dave’s points almost word-for-word — Ives said Apple could also “lay the foundation for an AI App Store, with developers building consumer-focused apps on top of the AI tech stack that Apple has worked on.”
Don’t Miss the Real Story Here
Ives is a pretty sharp analyst. And the fact that his comments almost perfectly track what Dave told us in that interview a week ago shows you what I already know: Dave Zeiler is one of the best Apple experts around … so we’re all lucky he’s part of the SPC analysis team.
He helped us understand just how wrong most investors are about Apple.
“The narrative is that Apple is far behind rivals on AI,” said Dave, an expert on big-tech trends, Apple and cryptocurrencies like Bitcoin (BTC). “That’s only partly true. Apple is behind on ‘Generative AI,’ the kind of AI that does chats, writes articles, and generates images. On that front, Apple is catching up fast. Execs realized they were lagging in very early 2023 – and that’s when they made AI a ‘tent-pole project.’ That’s why it’s making a deal with OpenAI to include ChatGPT in the next iPhone OS (and likely will get added to iPad and Mac as well). To train its in-house generative AI, Apple made a deal with Shutterstock to get access to its millions of images. But Generative AI is not the only type of AI. There’s machine learning, which include things like big data analysis as well as things like narrow AI, which include things like facial recognition. Apple has had these types of features in its products for years. One example is Siri, with suggestions based on your daily habits, and its ability to read text in an image.”
And the “Apple’s Next Act Trilogy” theory Dave, me and the SPC team created together is one you’ll find nowhere else.
We’re talking about:
Apple’s Next Act Part I: A Heady Vision – where we delve into the vastly underrated-and-misunderstood plan to bolster its vaunted ecosystem by creating the Vision Pro headset.
Apple’s Next Act Part II: Keeping That Doctor Away – where we investigate the current status and future upside of the company’s data-driven foray into health.
And Apple’s Next Act Part III: Apple’s Blueprint and the Great AI Event – where I interview Dave about the artificial-intelligence (AI) strategy we expect the company to announce in the 2024 keynote of the WWDC, slated for today. We followed that with this special briefing report.
If Ives is right, and today’s AI game plan (eventually) adds $30 a share to $40 a share to Apple, we’re talking about a boost of as much as 20% just from that strategic addition. (Apple currently trades at about $196 a share; a $40 boost would put it at $236. That’s not an “instant boost,” but one that will play out over time.
We like Apple’s growth initiatives. And we like the company’s long-term outlook.
“As you know from our long relationship, Bill, I’ve been following this company for a long, long time — so I can say with certainty and authority that far too many investors are sleeping on Apple’s long-term prospects,” Dave told me Friday afternoon. “AI is the story of the moment. But it’s not the ONLY story. I believe in Apple’s data story. I believe in Apple’s health story. And, Bill … I kinda dig the headset. The naysayers who only see it as an overpriced, under-featured $3,500 toy are missing the big picture … they just don’t get it. First … it’s a device that meshes perfectly with the AI push. And there’s all sorts of cool uses in ‘augmented’ reality. SPC readers should go back and check out your ‘Trilogy.’ It’s a powerful story. And I know your thesis here is that powerful stories lead to powerful stock plays. This is a powerful story.”
