In the movie Home Alone, Macaulay Culkin’s character, Kevin McCallister, was left to fend for himself. Some might see it Apple (NASDAQ: AAPL) in a similar role in the race to develop artificial intelligence (AI) technology.
However, that picture could quickly change. Apple’s highly anticipated AI reveal could happen in just 14 days. Should you buy the stock now in anticipation of a big move?
Mark your calendars
Apple’s management team has been dropping hints for some time that major news regarding its AI strategy is on the way. CEO Tim Cook said earlier this month in the company’s second-quarter earnings call that Apple is “making significant investments” in generative AI. He added, “[W]We look forward to sharing some very exciting things with our customers soon.”
Cook’s comments came just after he announced Apple’s Worldwide Developers Conference (WWDC), which was set to kick off on June 10, 2024. He was excited about this event: “We can’t wait to reveal what we have in store.”
Did Cook state unequivocally that Apple would announce new AI products at WWDC? No. However, many Apple watchers believe the tech giant will use this conference to make a big AI splash.
The speculation is so widespread that I think Apple almost has to, at least partially, spill the beans on what its AI plans are. With the shares languishing so far in 2024, while most other ‘Magnificent Seven’ stocks are up double digits (or, in NvidiaIn the case of three figures) Apple has a lot to thank for convincing skeptics that it won’t be left in the dust with AI.
What Apple could announce
We’ll (presumably) have to wait a few weeks to know for sure what AI-related announcements Apple will make. However, there’s no shortage of guesses about what’s on the way.
Bloomberg’s Mark Gurman thinks Apple’s AI strategy is three-fold:
Gurman expects Apple to use its own LLMs for devices and cloud. However, he believes that Apple will adopt OpenAI’s GPT-4 chatbot and perhaps go along with it Alphabet‘s Google Gemini.
The New York Times recently reported that Apple will unveil major improvements to AI assistant Siri at WWDC. Citing sources “familiar with the company’s work”, the newspaper said the updated version of Siri will include new generative AI technology.
Apple regularly highlights new versions of its operating systems at its annual WWDC events. The company is expected to announce iOS 18 with significant new AI functionality, including AI support in the Keynote and Pages apps, AI editing tools similar to those found in Android smartphones, and automatically generated Apple Music playlists.
Should You Buy Apple Stock Now?
Buying Apple stock now in hopes of a big rebound the week of June 10 comes with three main risks. I will discuss them in order from least concerning to most concerning.
First, it’s possible that Apple won’t have its big AI reveal at WWDC. Many people will be shocked if that is the case, but it is not entirely out of the question. Still, I’m willing to bet that Apple will make big AI announcements within the next few weeks.
Second, Apple could announce great new AI functionality but not move the stock much. There are so many rumors floating around about what the company will unveil that they may already be largely baked into the stock price. With Apple trading at a 29 earnings multiple yet posting a 4% year-over-year revenue decline in the last quarter, there’s no doubt that investors are confident something to boost growth.
Third, Apple’s new AI offering could be disappointing. If this happens (and I’m definitely not ruling it out), look for Apple stock to take a hit.
With these risks in mind, I don’t think investors should buy Apple stock just to benefit from a potential near-term AI-related catalyst. That said, I’m cautiously optimistic about the company’s long-term prospects. With more than 2 billion devices in use worldwide, Apple should be in a prime position to dominate edge AI: the use of AI on devices where data is created rather than in the cloud. Hopefully we’ll learn more about how Apple plans to conquer this market within the next 14 days.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights has positions at Alphabet and Apple. The Motley Fool holds positions in and recommends Alphabet, Apple, Nvidia and The New York Times Co. The Motley Fool recommends the following options: short July 2024 $45 calls on The New York Times Co. The Motley Fool has a disclosure policy.
Apple’s long-awaited unveiling of artificial intelligence (AI) could happen in just 14 days. Should you buy the shares now? was originally published by The Motley Fool
