Apple Faces Market Pressure Amid AI Lag and Investor Concerns

Apple, once the undisputed leader in consumer tech innovation, is facing increased scrutiny from investors as it lags behind competitors in the race to develop and integrate artificial intelligence, Axios reports.

The company’s stock is down 15% this year, even as peers like Nvidia and Microsoft continue to surge on AI-driven momentum.

Wall Street analysts say Apple’s delayed rollout of meaningful AI products has raised questions about its ability to compete in what many are calling the “fourth industrial revolution.” At the same time, concerns over tariff exposure, executive turnover, and slowed innovation have added to the company’s challenges.

“Apple needs the AI story because that’s what’s being rewarded in the market,” said Dave Mazza, CEO of Roundhill Investments, in an interview with Axios. “Until that changes, they’re going to be looked at… as a loser.”

Though Apple recently unveiled its “Apple Intelligence” initiative, the launch has yet to satisfy investor expectations. The company’s June Worldwide Developers Conference left many underwhelmed, with critics arguing the AI features were incremental rather than transformative.

Historically, Apple has excelled by waiting for technologies to mature before refining and mainstreaming them — as seen with the iPhone’s release years after other smartphones hit the market. Some analysts argue that Apple’s deliberate pace could still work to its advantage.

Still, others believe the company’s AI strategy needs a more immediate boost. Longtime tech analyst Dan Ives has urged Apple to pursue a major acquisition, naming Perplexity AI as a potential $30 billion target that could help the company catch up in the generative AI space.

“Apple is at a highway rest stop on a bench watching this 4th Industrial Revolution race go by at 100 miles an hour,” Ives wrote in a recent client note.

Despite the AI lag, Apple’s fundamentals remain strong. The company has nearly $80 billion in cash on its balance sheet and a global revenue base, with about 60% of sales coming from outside the US. A weaker dollar also stands to benefit its earnings.

Meanwhile, Apple’s services division — which includes subscriptions, the App Store, and cloud offerings — has become the company’s fastest-growing segment, accounting for nearly a quarter of total revenue as of September 2024, according to FactSet.

Some experts believe Apple still has time to adjust its strategy. Brian Mulberry, a portfolio manager at Zacks Investment, notes that the company’s vast resources and loyal customer base give it room to maneuver.

“Apple has 24 to 36 months before it has its own AOL moment,” Mulberry said. “There would have to be something truly disruptive that draws customers away. It’s not there yet.”