What Apple has to say about AI this week could finally lift its battered stock

CNBC

5 hours ago

For investors, the stakes are high for Apple to deliver at its developer conference this week. Apple holds its annual Worldwide Developers Conference in Cupertino, California this week, opened by a keynote address Monday by CEO Tim Cook that many hope will have unveil an artificial intelligence strategy compelling enough to kickstart a new iPhone replacement cycle. That will be important for a stock that has floundered this year, ceding its crown as the world's most valuable public company after taking a beating from President Donald Trump's tariffs. The iPhone maker, now trailing Microsoft and Nvidia in market value, is more than 20% off its all-time high reached in late December. WWDC "is important every year, but it's probably as important as it's ever been," said Art Hogan, chief market strategist at B. Riley Wealth Management. "That's going to be instructive, because Apple has been one of the biggest underperformers of the large cap technology stocks, full stop." AAPL YTD mountain Apple, year to date Reversing the narrative Investors look to the developer conference as an opportunity for Apple to reverse the narrative, especially as its fledgling AI offering has some in the company concerned Apple could face an existential crisis in the future. Its Apple Intelligence product has lagged behind other generative AI models such as those from Google-parent Alphabet , Meta Platforms and OpenAI. Still, users are confident that Apple has the time to get it right, given its history of developing new features and its massive base of customers loyal to the company's devices. "When someone says, 'What's your favorite, you know, chatbot right now? Who are you using agentically for artificial intelligence? Well, you've got, you know, five, six, seven, eight decisions to make there," Hogan said. "Typically, you only have one decision on where you're accessing them from. It's like, 'Well, this is what I use on my iPhone.' 'This is what I use on my iPad.' 'This is what I use on my Mac Book.'" "So I think that the fact that they've got a large and loyal base of users, their ability to now talk to us next week about what it is they're going to be delivering to that user base, will be exciting," Hogan said. "And the first time that they will have exciting news to talk about as it pertains to artificial intelligence." Stock catch up A positive catalyst also means Apple could start to play catch up to the other Magnificent Seven stocks. The iPhone maker is the only one of the megacaps tech companies that's down so far this quarter, off by 8%, even as investors as a whole have returned to growth stocks . "Apple can help lift the market if, in fact, it delivers a story in WWDC that is constructive around its latest rollout of devices," Hogan said. However, others on the Street are less enthused. This week, Needham analyst Laura Martin downgraded Apple to hold from buy and removed her price target, saying the iPhone maker's high valuation and Apple's slower growth has dimmed her view. She's also concerned Apple will not have anything particularly exciting to share at WWDC, citing rumors from blogs that have longered the tech company. "We have sort of a comprehensive summary of features of what they're going to say at WWDC next week, and what they're going to announce for features for iPhone 17, and neither of those feel it will be compelling enough to drive owners to upgrade their iPhones," Martin said. "So, the impact it has on Apple is, if we don't hear anything exciting or intriguing next week, then Apple, the stock, will not have a positive catalyst." Still, JPMorgan analyst Samik Chatterjee pointed out that the summer period, from June to mid-September, is a seasonally strong one for Apple, as excitement usually ramps up over new iPhone releases. Friday capped off a winning week, with Apple rising 1.5% in the most recent five days, extending its latest move higher to a third week in four.