Apple (NASDAQ:AAPL) stock has been spending much of the year in recovery mode after shares started off the year with a nasty slide that eventually led to a post-Liberation Day bottom. Indeed, since those now-distant April lows, shares have gone on to gain close to 50%. And with shares starting to flatline just shortly after hitting new all-time highs just north of $258 per share, the big question is what the next big move will be.
Some bears, including those at Jefferies, who slapped the stock with a sell rating, think there’s downside risk to worry about as iPhone hopes get overheated. Others, like Wedbush Securities’ Dan Ives, think Apple has a “massive opportunity” to capitalize on AI. With a $310 per-share target on shares of AAPL, he’s among the biggest of bulls on the name.
Personally, I’m more inclined to side with Ives and the bulls, given Apple seems like a story that’s about so much more than just the iPhone, iPad, and Mac; it’s more about the AI strategy, which, I believe, will become clearer in 2026.
You could argue that Apple is playing from behind in the AI ballgame, especially compared to the likes of current leaders like OpenAI. However, with that also comes an opportunity to make up significant ground. Some of the more skeptical analysts may not be sold on such an AI comeback.
AI expectations feel too low for Apple.
Either way, I think expectations surrounding AI are low enough that shares might be able to enjoy an Alphabet (NASDAQ:GOOG) moment next year if its coming AI innovations are received more favorably.
Indeed, Apple Intelligence has seemingly set a low bar for Apple and AI, perhaps so much so that a well-polished product might be able to spark a breakout, the likes of which Apple may not have seen since 2020. Even without a gigantic leap between iPhone releases, I do think getting AI right could mean the difference between decent results and one of those once-per-decade device supercycles.
With OpenAI hogging the headlines again this past month, following a number of deals, new app launches, and investments, questions linger as to whether Apple will step up with an investment of its own. Indeed, the AI rumor mill has been alive and well for Apple. But I would be shocked if the iPhone maker were to make a move now.
After all, Apple doesn’t typically follow the herd.
Arguably, it’s better-positioned to innovate organically on AI, especially as the firm makes new strides in the new year. With a big AI-driven upgrade coming to Siri (early-2026?) and the potential integration of Google Gemini, Dan Ives seems right to be bullish on AAPL stock when so many others have moved on from the name to hotter Mag Seven stocks that have attracted more of that AI upside.
Future upgrades could make Siri and Apple Intelligence far more competitive
Personally, I think Siri only has higher to go from here. Even if the “personal intelligence” opportunity doesn’t immediately hit the spot for consumers, I think the bar on Apple Intelligence is low enough that even modest upgrades could be enough to convince those with older devices to upgrade.
Of course, if Apple does get AI right, a device supercycle could coincide with the launch of new AI-driven applications that help take services revenue growth into overdrive. Indeed, an AI-powered health coach or something similar could be a big deal, especially if they make good use of the vitals read by the Apple Watch.
Combined with a smarter, personalized Siri that can make good use of an AI search engine, like “World Knowledge Answers,” and I think the Apple party is just getting started. I think that by this time next year, most folks will view Apple as a serious rival with OpenAI when it comes to new AI apps.
As Apple critics have questioned Apple’s AI, the team has been busy observing and likely exploring ways to make AI better for its customers. Indeed, AI tech, as it exists today, is impressive, but there’s room for betterment. And I think Apple will be a catalyst for such.
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