Apple AI announcements are ‘table stakes’: Strategist

Apple (AAPL) has unveiled a partnership with OpenAI at its Worldwide Developers Conference. Harvest Portfolio Management co-chief investment officer and Wall Street Beats partner Paul Meeks joins Asking for a Trend to break down Apple’s latest AI initiatives and investor reactions.

“They made AI announcements that were essentially table stakes,” Meeks explains. “It’ll sell some iPhones, but I don’t know if it’s going to be significant enough to get the bulls even more excited if you get the stock close to what is already an all-time high.” He is skeptical that these advancements will jumpstart an iPhone upgrade cycle, adding that part of the lift of the cycle will be due to simply upgrading old models.

“There’s a lot of money going into AI infrastructure builds, and that will continue for a while. But the AI apps, the follow-on, I don’t know if there are going to be that distinctive,” Meeks tells Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode.

This post was written by Melanie Riehl

Video Transcript

We start here with Apple highlighting, anticipating A I announcements which included a partnership with Open A I failed to blow away investors today.

Apple finally to keep pace in the A I race with the likes of fellow mag seven names like Microsoft and Google for more.

Now we are bringing in Paul me cos IO at harvest portfolio management and partner at Wall Street beats.

Uh Paul, it is good to see you and, and listen, you have been Paul following tech a long time investing in tech names for a long time, Paul you, I’m sure you were watching Apple’s big show today gi give us the takeaways, Paul.

What do you make of it?

Well, I think what they did is they made A I announcements that were essentially table stakes, maybe a little bit better but nothing really distinctive except for maybe the privacy piece, not only for the software developers but for the end customers, but that’s always been part of Apple shtick and I’m not surprised at all with the subdued reaction post the meeting because what you really need to see with Apple is all these A I announcements accelerating revenue growth because here’s a company that hasn’t had a year to year double digit revenue growth quarter since the December quarter of 21 and five of their last six quarters revenues actually shrink.

I do not know if what they announced today will be, it’ll definitely be a catalyst.

It’ll sell some iphones, but I don’t know if it’s gonna be significant enough to get the, uh, bows, uh, you know, even more excited if you get this stock close to what is already a all time high.

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And as I said, company hadn’t been growing and, and Paul, you’re kind of leading me where I wanted to go here because I think it’s the big question you touched on there for viewers listening right now, which is when they heard, you know, listen, they heard Tim Cook today.

They, they heard, uh, Craig Federici, that’s Apple’s software chief.

Do you think what you heard today is Apple laid out his vision and laid out these A I features, Paul.

Do you think that is enough to kind of jump start a meaningful iphone upgrade cycle?

You know, we would expect Tim Cook to take the stage in September, introduce those new shiny iphones.

Do you think we get that Paul?

Because you sound a little bit more, maybe skeptical there.

Oh, I’m definitely, uh, skeptical we’ll get a, uh, cycle, you know, like, for example, Dan Ives, well known analyst that covers this stock buddy of mine and one of your, your competitive networks.

Thought this was a dream team scenario announcement.

I don’t think so.

We will have a iphone cycle.

We’ll get a little bit of a lift.

But remember part of the lift will be that we have a lot of iphones in the ecosystem that are now 34, even five years old.

So they’re due to be refurbished.

But I don’t think this is gonna be that big of a deal or the people that say it’s gonna be a big deal, they don’t really know, uh they’re speculating because I’ll believe it when I see it because as you know, you know, there’s a lot of money going into A I infrastructure builds and that will continue for a while.

But the uh A I apps, the follow on, I don’t know if they’re going to be that distinctive.

Might they be commoditized features?

They very well could be.

And so I am not betting on any of these software companies or device companies even Apple, but I stick with the infrastructure builders that I can count on.

I don’t know if there’s gonna be enough gold at the end of this rainbow once we build all these large language models, even including for Apple.

If I were to channel my inner Apple Bull though Paul, I would, you know, I’m, I’m Dan Ives, I’m Gene Munster.

I’d probably say what you kind of just alluded to there, which is I’ve seen stats Paul that something like 40% of iphone users are now having a device that’s more than four years old.

That’s a lot of old iphones out there, Paul and see.

So the idea would be, you know, this, that, that it just isn’t gonna take much to get those people to upgrade in the fall.

I’ll throw in some, some shiny new A I features, I’ll give them a faster processor, a better camera, the usual Paul and that’ll be enough.

What do you say to that?

I think you’re alluding to the bull argument that it’s gonna be a monster upcycle, right?

I think that I’ve said about an hour or so ago said super cycle.

I see a cycle.

I just don’t know if it’s gonna be that big and the problem is with the stock, uh at about its current price, you know, almost $200 a share.

You’re betting on those dreams to come true and I think we’ll see some action.

We will see a decent iphone refresh.

I just don’t know how glorious is gonna be.

And if you think the stock is worth $200 a share, you’re expecting a big move in the iphones.

I don’t know if I see it.

All right.

Not sure.

Will it be glorious if it is Paul, I’ll have to have you back regardless.

We’ll have you back, Paul.

Thank you for joining us.

Appreciate it, sir.