Evercore convinced Apple’s ‘measured approach’ to AI will reap rewards

Evercore ISI analysts said Wednesday that investors have been “struggling to understand” Apple’s (AAPL) AI strategy, especially when compared to competitors who have been more openly aggressive about their AI ambitions and investments.

The analysts emphasize that AI does not pose an “existential threat” to Apple’s business as it might for other companies. Instead, for Apple (NASDAQ:AAPL), AI is seen as a complementary offering that enriches its ecosystem, making it more appealing and integrated for its more than 2 billion iOS users.

“We think AAPL has a solid AI strategy that centers around deploying AI on the edge, the goal of this for AAPL is to make the user experience better and the ecosystem stickier, while triggering an iPhone super cycle down the road,” analysts said in a note.

“Apple has taken a more measured approach to generative AI compared to its big tech peers who have invested 10s of billions in infrastructure and R&D,” they added.

Evercore highlights that the tech giant has been increasingly transparent about its AI strategy through various white papers, which detail the company’s technological advancements and deployment strategies, particularly at the edge.

Analysts anticipate that the upcoming Worldwide Developers Conference (WWDC), starting June 10th, will provide the first substantial insight into Apple’s AI initiatives. These are expected to be incorporated into iOS 18, featuring enhancements like visual search, advanced photo editing, and a revamped Siri.

Moreover, the company is likely to enable developers to build and run their AI models directly on iPhones while it partners with other tech giants, such as Google (NASDAQ:GOOGL), to offer cloud-based solutions for more demanding AI processing tasks.

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“This partnership will free up Apple’s resources to focus on delivering AI on the edge (on-device inference), which we think could drive the next iPhone super cycle,” analysts wrote.

“We continue to think Apple’s more measured approach to AI will reap rewards. We see WWDC as a likely upside catalyst,” they concluded, maintaining an Outperform and the $220 price target on Apple stock.