Apple Inc.’s (AAPL) stock has dropped nearly 19% this year, leaving it as the only member of the so-called “Magnificent Seven” tech giants to fall behind. The company’s delay in launching its long-promised artificial intelligence (AI) upgrade has raised concerns among investors.
The AI upgrade, which was touted as a major innovation, has faced significant delays and setbacks. Recent reports suggest that internal demos were met with poor results, citing hundreds of bugs, and ads featuring the game “The Last of Us” star Bella Ramsey were quietly pulled. Executives have now postponed the launch indefinitely, with one former Apple leader calling the AI plan a stumble.
Analyst sentiment is also cooling, with fewer “Strong Buy” ratings than last year and top-rated analysts lowering price targets. Hedge fund activity in AAPL has slowed, and insider confidence is muted.
While Apple’s financial engine is shifting towards high-margin services, its competitors are making significant strides in AI development. Microsoft is investing heavily in OpenAI, while Meta and Google are deploying foundation models across billions of users.
With WWDC approaching, investors are looking for evidence that Apple can deliver on its promises. The company’s premium valuation was built on the assumption of leadership, but the market is rethinking that assumption. Despite this, AAPL still has a solid foundation, with over 2 billion active devices and a growing services business.
TipRanks data shows an average price target for AAPL stock of $228.65, suggesting a 12.13% upside. However, investors are now cautious about the company’s prospects, making “Buy”, “Sell”, or “Hold” recommendations uncertain.
As Apple navigates this challenging period, it remains to be seen whether the company can regain its leadership position in AI development and technology.
Source: https://www.tipranks.com/news/aapl-down-18-ytd-as-apples-ai-delays-erode-investor-confidence