Apple's Splashy AI Upgrades Fail to Impress Wall Street

BY PHIL ROSEN, CO-FOUNDER AND EDITOR, OPENING BELL DAILY @PHILROSENN

Even the best of the best can fall short of expectations. 

Just look how Wall Street shrugged off Apple's splashy AI announcements. 

In a keynote at the WWDC conference on Monday, Apple announced its push into the generative AI space with Apple Intelligence. CEO Tim Cook showcased upcoming upgrades to Siri, cloud services, and integration with OpenAI's ChatGPT, much of which onlookers and fans had anticipated. 

"We think Apple Intelligence is going to be indispensable to the products that already play such an integral role in our lives," Cook said in his presentation. 

Still, the hubbub failed to generate buzz among investors. Shares fell nearly 2% on the day--even as the S&P 500 and Nasdaq closed at fresh record highs. 

Wall Street may have been looking for some combination of more or better upgrades to the tech and business. By the end of the day, it turned into a "sell the news" event. 

For more than a year, retail and institutional investors have rallied around anything remotely tied to ChatGPT. The iPhone maker is late to a trend investors can't get enough of--one reason why the stock has traded flat this year. 

Meanwhile, Nvidia, the biggest beneficiary of the AI boom, has gained 152 percent. It's not nothing that, just a week ago it leapfrogged Apple in total market cap to become the second-most valuable public company in the US. 

For what it's worth, on Apple's big day, shares of Nvidia finished about 0.8 percent higher as it executed its 10-for-1 stock split.

Last year, Microsoft announced its OpenAI-powered AI tool, Copilot, and Google launched its Bard tool shortly after. Apple largely stayed mum through those debuts, which also helps explain the enormous hype leading up to Monday's event.

To be sure, a few months of sideways trading for Apple doesn't spell catastrophe for shareholders. Apple has rewarded its long-term investors handsomely over the years. Most Wall Street strategists remain upbeat on the stock, independent of whether AI pans out.

Here's what Wedbush analyst Dan Ives had to say after the event:

"Apple is taking the right path to implement AI across its ecosystem while laying out the foundation for the company's multi-year AI strategy across the strongest installed base of 2.2 billion iOS devices over the coming years with the Street giving no credit for AAPL's AI monetization."

His optimism seems well-placed. After all, it is hard to imagine a world where people stop using iPhones. You're probably reading this on one now. 

Photo Credit: Getty Images.