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Sometimes it’s a good thing to arrive late to the party — just ask Apple.
While Tim Cook’s vanguard stumbled through missteps in AI adoption, boardroom drama and public backlash, he strode through the door with a casserole of Apple Intelligence and Wall Street analysts ready with drinks.
Morgan Stanley named Apple its top pick on Monday, sending the company’s shares to an all-time high, and the firm raised its price target on what it expects to be a major upgrade cycle driven by Apple’s upcoming AI platform.
“Apple Intelligence is a clear catalyst for boosting iPhone and iPad shipments,” Morgan Stanley analysts wrote.
The fact that Apple’s yet-to-be-released AI tools will be available to just 8 percent of existing iPhone and iPad users supports the argument that upgrade cycles are unusually long, they said. Combine that with an already-massive user base and a replacement cycle that’s stretched to almost five years, and you can see why so many people are anxiously awaiting a new device.
It’s a testament to Apple’s AI strategy and how it has expertly presented what AI tools can do for its users. By relentlessly emphasizing everyday use cases, Apple has managed to package AI’s more fanciful promises into something manageable (and monetizable) within its own ecosystem.
Before Apple’s AI surge, skeptics in Cupertino pointed to upgrade fatigue, slowing iPhone growth and a saturated smartphone market in the U.S. Recent hardware releases have also sparked complaints of a lack of appeal, fueling the view that Apple’s glory days are over.
When the company killed its electric car project in February, it looked like Apple was giving up on a bold initiative and succumbing to the AI craze. But that inflection point now looks different: As Cook’s insights into AI’s service-oriented approach grow, the company’s AI strategy looks less like Google’s or Microsoft’s and more like an extension of their walled gardens.
Loop Capital likened the potential of Apple’s AI to previous generations of technology.
Twenty years ago, the iPod was the platform through which many consumers experienced digital content. Its successor, the iPhone, was of course a “latecomer,” but this iconic device became the foundation for social media and redefined the category.
And now, through generative AI, Managing Director Ananda Baruah wrote on Tuesday that Apple’s AI platform will become “base camp” for consumers.
But what’s striking about the outpouring of Wall Street support is that Apple never actually overcame the hardware traps that critics claim it fell prey to. While AI technology and its use cases may seem revolutionary, the business implications for Apple are all too mundane: People will buy more phones.
It’s not a world-changing paradigm shift, but it’s a surefire way to make money.
Hamza Shaaban is a reporter covering markets and economics for Yahoo Finance. Follow Hamza on Twitter. translation:.
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