Artificial intelligence (AI) is a huge opportunity for a device maker like Apple (AAPL 1.69%) to take advantage of. With more than 2.2 billion active Apple devices in the world, if the company can use AI to help create a new income stream for its operations, that can be a huge growth catalyst for the business, which is something Apple needs given its underwhelming growth in recent years.
While the company has announced plans for Apple Intelligence to run on its phones and for that to potentially lead to more sales, it's been lagging behind its rivals. And Apple recently announced that it's going to be even longer than expected before it fully rolls out all of its AI features.
Could this hurt the stock and weigh on its growth prospects, or can this actually end up benefiting investors in the long run?
NASDAQ: AAPL
Key Data Points
AI-enhanced Siri won't be coming until 2026
Earlier this month, Apple announced that its Siri assistant won't be receiving AI enhancements until next year. Previously, it was planning for the features to come this year. That still would have been longer than many other tech companies that have already rolled out their own AI assistants.
Users can, of course, use ChatGPT and many other chatbots to help with their day-to-day tasks, such as summarizing data or helping to respond to messages.
Where Apple is going to differentiate itself is by offering a more personalized solution which considers "personal context" when filling out information or taking an action for a user, to make it less generic than a response might be from a regular chatbot.
However, Apple notes that "it's going to take us longer than we thought to deliver on these features and we anticipate rolling them out in the coming year." But taking its time and making sure its AI delivers on its promises can help the business meet expectations and give consumers a reason to upgrade their devices.
Will delaying AI features hurt Apple's stock?
Apple arguably hasn't been rolling out cutting-edge technology for years, often relying on just making minor upgrades to its iPhones, and that has been enough of a reason for users to upgrade their devices. This time around, taking its time and doing a more thoughtful upgrade for AI could help the business in the long run by ensuring that it's taking AI and privacy-related concerns seriously.
Unfortunately, with economic conditions being far from ideal, Apple's top line hasn't been great as sales have been slowing. The company's product sales in its most recent fiscal year, which ended on Sept. 28, 2024, totaled $295 billion. While that's massive, it's also the second straight year when the company's product revenue declined. Service-related revenue has been rising, but product sales account for three-quarters of total revenue.
Meanwhile, the threat that tariffs pose on its bottom line only exacerbates concerns about Apple's financials deteriorating even further in the near term. While Apple isn't a fast-growing company these days, it is trading like a growth stock -- investors are paying a multiple of 34 times trailing earnings for a piece of the business. The delay of AI features comes when the company may desperately need a way to boost its numbers and divert investors' attention away from tariffs and rising costs.
Apple is still a good buy, but investors should brace for volatility
It's not great to hear that Apple is further behind schedule when it comes to AI, but that doesn't change the company's overall fundamentals. This is still an excellent brand with a loyal legion of fans.
When AI comes to Siri and device upgrades inevitably take place, there could be significant growth ahead for the business, both from new device sales and monetizing AI capabilities. If the delay leads to a lower stock price, that could help investors who buy Apple stock today set themselves up for better returns in the long run.
In the short term, the tariff risk may pose the biggest problem for the tech stock. Since it introduces some added uncertainty into the mix, investors shouldn't be surprised to see some volatility ahead for Apple's stock. But if you're willing to hang on for multiple years, then it can still be worth adding the stock to your portfolio today. Waiting and trying to find the best time to buy Apple's stock could result in you missing profits along the way.
When it comes to an industry-leading company such as Apple, any dip in value can make for a great buying opportunity, as the stock is likely to continue to head higher for years to come. This is the type of investment you can buy and forget about.
