Numerous companies across the technology landscape are going full steam ahead in the artificial intelligence (AI) race, investing gargantuan sums of capital to build computing infrastructure. By comparison, Apple (AAPL +0.22%) is taking a cautious approach; its capital expenditures totaled $12.7 billion in fiscal 2025 (ended Sept. 27).
Critics have called out the consumer tech enterprise for falling behind, as it hasn't really introduced game-changing AI features, with its AI-powered Siri being delayed. Whatever way things shake out, however, I predict that Apple's dominant position won't fade in the age of AI.
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Apple's distribution advantage is impossible to overstate
About a year ago, CEO Tim Cook revealed that there were 2.35 billion active Apple devices around the world. In the quarters since then, he's mentioned that this installed base continues to hit new records. Given that the iPhone represents half of product revenue, a rough assumption leads to the conservative estimate that there are more than 1 billion active iPhones out there.
This provides Apple with an incredible distribution advantage. It's quite literally in the pockets of a large swath of consumers in virtually all corners of the globe. And the fact that the iPhone is nearly two decades old in its life cycle supports its relevance going forward. It has stood the test of time.
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Will a new game-changing device be introduced?
Over the next decade, advancements in AI could prove to be civilization-altering, or they could introduce marginal improvements. No one knows with any level of confidence. Perhaps the reasonable view is to rest somewhere in the middle.
A lot of praise is given to OpenAI's ChatGPT because it reached 100 million users two months after release, faster than any other consumer app in history. But it's important to understand that using the chatbot didn't require consumers to buy a new piece of hardware. There was minimal friction to get on board and test it out.
Regardless of your level of bullishness on AI's potential, it's difficult to envision a future in which the smartphone generally, and the iPhone specifically, still isn't the single most important device people carry with them, as it's our main window into all things digital and the internet. For what it's worth, Apple is working on a wearable AI pin. OpenAI is hoping to launch its own product in late 2026.
Never say never. However, I believe Apple's competitive moat, fortified by its distribution and reach that is supported by robust brand recognition and a powerful walled garden, will hold up in an economy and society that could become more influenced by AI.
