Are you hopelessly devoted to Apple (AAPL) 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 dedicated customers would form massive lines outside the company’s stores.Things got so hairy that Galaxy smartphone maker Samsung made TV commercials mocking the phenomenon. Apple customers are indeed fiercely loyal. One survey found that 92% of iPhone owners plan to stick with the company for their next phone purchase. Related: Analysts revamp Palantir stock price targets on new AI outlookLittle wonder that the company took the No. 1 spot in Interbrand’s annual Best Global Brands 2023 report for the 11th consecutive year, and it’s the first brand to rise above half a trillion dollars in brand value.”A brand like Apple can no longer be ascribed to a sector,” Manfredi Ricca, Interbrand’s global chief strategy officer, said in a Nov. 21 statement. “It competes across different arenas, helping its customers connect (the iPhone), but also thrive (the latest Apple watch was positioned as a health device), fund (its new savings account drew nearly $1 billion in deposits in the first four days), and much more,” he said.Observers say that the long Apple store lines have mostly faded. However, queues did crop up at Apple Stores in Dubai, Australia, and China in September with people who didn’t pre-order 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 investors may vastly undervalue.
Analysts see big AI possibilities for Apple.South China Morning Post/Getty Images
Analyst: Siri ‘prime candidate’ for AIApple posted better-than-expected December quarter earnings earlier this month, but weak China sales and a muted iPhone revenue forecast marred the glad tidings.Now, the company appears to be gearing up to get in on the artificial intelligence firestorm that is burning up the tech sector.Related: Analyst reveals new Broadcom stock price target tied to AIIf Apple has its way, companies like OpenAI, Google, Nvidia, and Microsoft won’t be the only ones that profit from the AI tidal wave.During the Cupertino, Calif.-based company’s Feb 1. earnings call, CEO Tim Cook told analysts that AI “is a major focus of ours.””It’s incredible in terms of how it can enrich customers’ lives,” he said, citing the iPhone’s car crash and fall detection features and Apple Watch’s ECG app.”I mean, these things have literally saved people’s lives,” Cook said, according to a transcript of the call. “And so we see an enormous potential in this space to affect virtually everything we do.””It’s obviously a horizontal technology, not a vertical,” he continued. “And so it will affect every product in every service that we have.”Bloomberg reported in October that Apple was late to the AI shindig and is looking to add AI features like auto-summarizing and auto-complete 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 that launched on the iPhone on Oct. 4, 2011- one day before Steve Jobs, the company’s co-founder, died.Analysts seemed awfully excited about Apple’s AI intentions–whatever they may be.Apple has not yet announced anything definitive on its Al strategy. Still, Evercore ISI analyst Amit Daryanani believes the company is “an underappreciated Al beneficiary” that stands to significantly benefit 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, parse, and create content.Daryanani told investors on Feb. 12 that Siri is the prime candidate for an LLM-driven upgrade, as the product currently lacks sufficient functionality, and a truly capable and reliable virtual assistant would be “a game changer.”AI ‘Super Bowl moment’ for AppleThe analyst, who maintains an outperform rating and $220 price target on Apple shares, also believes that an LLM-enhanced iOS can add significant functionality to iPhone users.He’s not alone.Wedbush analyst Dan Ives also sees game-changing possibilities for the tech giant, comparing Apple’s AI endeavors to the most watched event in the world.More AI Stocks: AI wave takes this stock to record highs as investors look beyond Mag 7 AI stock soars on new guidance (it’s not Nvidia!)Big tech stocks are doubling down on AI”We believe the ‘Super Bowl moment for Apple’ will be when Cook & Co. finally take the covers off the generative AI technology being worked on in the labs of Apple Park,” he said, “and introduces it to developers and consumers at WWDC (Worldwide Developers Conference) in June followed by the exclusive AI features we expect to be included on iPhone 16.”Ives, who has an outperform rating on Apple shares with a price target of $250, said in a research note that “with now a staggering 2.2 billion iOS active devices (up from about 2 billion a year ago), the game-changing monetization opportunity for Cupertino will be introducing a standalone AI App Store to developers that lays the groundwork for Apple’s AI growth.””We believe the incremental revenue from services from Apple around AI could be $5 billion+ annually, and it’s just the start of this renaissance of growth at Apple,” he told investors.And while the China demise narrative has been the black cloud over the Apple story, Ives said he is expecting iPhones “to show year-over-year growth during the Lunar New Year in China. as some promotions and a stepped-up marketing campaign by Apple has been very successful in the mainland.””Apple has a fight on its hands with (state-backed tech giant) Huawei and some geopolitical headwinds,” Ives said, “but the reality is with over 200 million active iPhones in China, very few consumers are switching out of the Apple ecosystem, and that is the linchpin to our bullish thesis for Apple in China despite Street concerns.”Related: Veteran fund manager picks favorite stocks for 2024