Are you hopelessly devoted to Apple (AAPL) some products? Well, get in line.
There was a time in the tech giant’s history when a new Apple product dropped, a veritable flash mob of fiercely devoted customers formed massive lines outside the company’s stores.
Things have become so complicated that Galaxy smartphone maker Samsung has made TV commercials mocking the phenomenon.
Apple customers are indeed fiercely loyal. A survey found that 92% of iPhone owners plan to stick with the company for their next phone purchase.
It’s no wonder the company took the top spot in Interbrand’s annual Best Global Brands 2023 report for the 11th year in a row, and is the first brand to surpass half a trillion dollars in brand value.
“A brand like Apple can no longer be assigned to one sector,” Manfredi Ricca, Interbrand’s director of global strategy, said in a Nov. 21 statement.
“It competes in different areas, helping its customers not only connect (the iPhone), but also thrive (the latest Apple Watch has been positioned as a health device), fund (its new savings account has attracted almost $1 billion in deposits in the first four days), and much more,” he said.
Observers say the long lines at Apple stores have mostly disappeared. However, queues formed at Apple Stores in Dubai, Australia and China in September with people who had not pre-ordered an iPhone 15 online, according to Bloomberg.
Apple’s large and loyal fan base makes it an ideal candidate to benefit from the widespread adoption of artificial intelligence, an opportunity that investors may be significantly undervaluing.
Analyst: Siri is the ‘ideal candidate’ for AI
Apple reported better-than-expected quarterly results earlier this month, but weak sales in China and subdued iPhone revenue forecasts spoiled the good news.
Now, the company appears to be preparing to ride into the artificial intelligence storm that is ravaging the tech sector.
If Apple succeeds, companies like OpenAI, Google, Nvidia and Microsoft will not be the only ones to benefit from the AI tidal wave.
During the Cupertino, Calif.-based company’s earnings conference call on Feb. 1, CEO Tim Cook told analysts that AI “is a priority of ours.”
“It’s amazing to see how much this can enrich customers’ lives,” he said, citing the iPhone’s car accident and fall detection features and the iPhone’s ECG app. ‘Apple Watch.
“I mean, these things literally saved lives,” Cook said, according to a transcript of the call. “So we see huge potential in this space that will affect virtually everything we do.”
“This is obviously a horizontal technology, not a vertical one,” he continued. “And so that will affect every product and every service that we have.”
Bloomberg reported in October that Apple was late to the AI shindig and was looking to add AI features like auto-summary and autocomplete to its core apps and productivity programs, such as Pages. and Keynote.
In addition, Apple is planning a major overhaul of Siri, the voice assistant launched on the iPhone on October 4, 2011, one day before the death of Steve Jobs, the company’s co-founder.
Analysts seemed awfully excited about Apple’s AI intentions, whatever they may be.
Apple has yet to announce anything definitive about its AI strategy. However, Evercore ISI analyst Amit Daryanani believes the company is “an underappreciated beneficiary of AI” that stands to benefit significantly from integrating large language AI models, or LLMs, into its core technology.
LLMs, including OpenAIs ChatGPT, which powers Microsoft’s Bing search engine and Google’s Gemini, allow users to quickly search, analyze and create content.
Daryanani told investors on Feb. 12 that Siri was the ideal candidate for an LLM-based upgrade because the product currently lacks sufficient functionality and a truly capable and reliable virtual assistant would be a “game changer.”
AI, the “Super Bowl moment” for Apple
The analyst, who maintains an outperform rating and $220 price target on Apple shares, also believes that an LLM-enhanced iOS can add significant features for iPhone users.
He is not alone.
Wedbush analyst Dan Ives also sees game-changing possibilities for the tech giant, comparing Apple’s AI efforts to the world’s most-watched event.
More AI actions:
“We believe the ‘Super Bowl moment for Apple’ will be when Cook & Co. finally pulls back the veil on the generative AI technology being developed in the Apple Park labs,” he said, “and will present it to developers and consumers during the Super Bowl.” WWDC (Worldwide Developers Conference) in June, followed by the exclusive AI features we plan to include on iPhone 16.”
Ives, who has an outperform rating on Apple shares with a $250 price target, said in a research note that “with now a staggering 2.2 billion active iOS devices (up from about 2 billion a year ago), the game-changing monetization opportunity for Cupertino will introduce developers to a standalone AI App Store that will lay the foundation for Apple’s AI growth.
“We believe incremental revenue from Apple’s AI services could reach more than $5 billion per year, and this is just the beginning of this growth renaissance at Apple,” he said. -he declared to investors.
And while the narrative of China’s demise has been the dark cloud over Apple’s story, Ives said he expects iPhones to “show year-over-year growth during the Lunar New Year in China”, thanks to certain promotions and an intensified marketing campaign by Apple has enjoyed great success on the continent. »
“Apple has a fight on its hands against Huawei (the state-backed tech giant) and geopolitical headwinds,” Ives said, “but the reality is that with over 200 million active iPhones in China , very few consumers are leaving the Apple ecosystem, and this is the fulcrum of our bullish thesis for Apple in China despite the Street’s concerns.
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