AI Could Push Apple Into a New Era Analysts Haven’t Modeled Yet

An unsurprising downgrade to sell courtesy of Jefferies has investors turning away from Apple (NASDAQ:AAPL | AAPL Price Prediction) stock, even as its biggest-ever 12-month product window begins to open starting with the iPhone 18 next month. Undoubtedly, it’s easy to turn bearish on shares of Apple at a time like this. Shares recently hit a new high, and the price-to-earnings (P/E) multiple eclipsed 40.0 times for a brief moment.

Add the good, but not jaw-dropping, quarter into the equation, as well as some discouraging developments, including the supposed cancellation of an all-glass iPhone and the ongoing mem-flation that might result in price increases that might cause some to postpone their upgrades for another year or maybe even longer, and it certainly feels like a “sell” rating on Apple is more than warranted.

Selling Apple stock ahead of its AI tailwind might not work out

Still, I think it makes very little sense to get out now that the name has already corrected. Also, I think Jefferies analyst Edison Lee placed just a bit too much emphasis on the all-glass iPhone, which, I think, misses the forest for the trees. Sure, it’d be nice to have a breathtaking new redesign for the 20-year anniversary.

That said, given low production yields at a time when Apple must preserve margin as DRAM and NAND costs weigh, I do think that practicality beats festivities every day of the week, even if it means underwhelming on the design for that 20th anniversary iPhone. At the end of the day, there are far more exciting things going on over in Cupertino, as the company finally makes strides that allow it to catch up in this AI race.

With the rise of on-device AI and personalized intelligence, I do think that Apple is just finally starting to scratch the surface of the consumer AI monetization opportunity with Siri AI and its newest foundation models, which might be a bigger game-changer than analysts, especially ones that recently turned bearish, might be at risk of discounting.

Will new AI features convince customers to upgrade despite what could be a mem-flation-related price increase of $300?

Probably not for the iPhone 18. But as the upgrades add up while the intelligence runs smoother, faster, and smarter, with more personalization and security added on top, my guess is that the case for Apple providing more incremental value than the added DRAM-related cost increases gets stronger, especially in 2027.

Indeed, 2027 is going to be the mother of all product years for Apple. And, in my view, I think it makes little sense to think that a DRAM-related price increase is going to spoil that party, especially as incoming CEO John Ternus looks to make his first year one for Apple shareholders to remember.

In my view, the soaring price of DRAM isn’t news, and it’s certainly no reason to sell Apple, especially since the headwind has been well-baked in for some time now. As for the canceled all-glass iPhone, I think there are bigger fish for Apple to fry, especially as AI and software become the major selling point of this new era for Apple.

It’s all about hardware, software, services, and now, AI. Hardware and services sales growth could just so happen to get a shot in the arm as AI and software look to “wow” customers who try devices in its stores.

At the end of the day, Apple is just going to squeeze more powerful and personalized models into the small form factor and, in my view, the company has a genuine opportunity to disrupt the AI cloud. Apple may be a different way to play AI.

Apple’s security and trust foundation makes it an agentic winner in the making

It’s essentially inverting the hyperscaler model, starting from the device and then building for the cloud later on. As for whether it’ll work, I think it’s just a matter of time before security and personal context help Apple win the consumer AI war and, eventually, the shift to on-device agentic AI.

When it comes to agents, trust and security really do matter, perhaps more than anything else. You’re not just going to trust an agent to look through your files and take action on your behalf unless you know that things will stay on the rails.

And perhaps there’s no better company positioned to win this consumer-facing agentic race than Apple, with on-device AI and Private Cloud Compute, as it stays close enough to the frontier with the help of Alphabet‘s (NASDAQ:GOOG) Google, which has been key in the development of Apple’s latest foundation models.

So, as others sell Apple over a few transitory headwinds and discouraging developments, I’d be more inclined to view the dip as a great buying opportunity as we enter an era where Apple’s AI does much of the selling.

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