Apple has not missed the AI boat, this investor says

Goodreid Investment Counsel president and CEO Gordon Reid told BNN Bloomberg’s Market Call on May 21 that Apple (Apple Stock Quote, Chart, News, Analysts, Financials NASDAQ:AAPL) remains attractive, even as some investors question whether the company has fallen behind in AI.

Reid said his firm has owned Apple since 2006, when it first bought the stock at the equivalent of about US$ 2.00 per share. It has trimmed the position at times for risk management, but recently added to bring it back to market weight.

“You don’t hear a lot about AI and Apple, and people have said, ‘Well, they’ve missed the boat,’” Reid said. “I think you just have to look at Apple’s history to understand that probably they haven’t.”

Reid said Apple has often let other companies do the early work in new categories before entering once the market is more mature, then using its ecosystem and scale to dominate.

“They usually let other companies do the hard lifting, and then they step in once things are a little bit more mature,” he said. “A decade later, they own the sector and the category.”

The analyst said Apple’s cash generation, App Store ownership and control of the consumer technology relationship leave it well positioned as AI evolves. Reid also pointed to possible AI-enabled phones, smart glasses integration or other device changes as potential reasons consumers may keep upgrading.

“There will be an aspect to it that will lead us as individuals to say, ‘Well, of course I have a new phone. I have to,’” Reid said.

While higher smartphone prices could be a headwind, Reid said the phone remains a must-have product.

“I think a phone is a must-have,” he said. “I commute to work on public transportation, and you just have to watch what people are doing. You just don’t see people there without their phones out.”

Reid said Apple’s AI strategy may become clearer over time.

“I think five years from now, the AI aspect of Apple’s involvement will be a lot clearer,” he said.

Apple shares have gained 46.81% over the past 12 months and 143.6% over five years. Of the analysts covering the stock, 37 rate it “Buy,” 18 rate it “Hold” and two rate it “Sell,” with a consensus price target of US$312.95.