Apple’s AI Problem Gets a Lot Worse

It could get worse for Apple investors if the iPhone maker fails to come up with a strong artificial intelligence strategy. The post Apple’s AI Problem Gets a Lot Worse appeared first on 24/7 Wall St..

Jun 2, 2025 - 14:22
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Apple’s AI Problem Gets a Lot Worse

Apple Inc. (NASDAQ: AAPL) stock has been hammered down by nearly 20% this year, and it could get worse. The first of two primary triggers is a possible 25% tariff on all iPhones imported into the United States. The other is that Apple’s artificial intelligence (AI) strategy is considered a dismal failure.

24/7 Wall St. Key Points:

Apple’s AI plans appear to be falling apart faster and more deeply than expected. Bloomberg reports, “Apple needs a comeback. But that probably won’t be happening at this year’s WWDC. People within the company believe that the conference may be a letdown from an AI standpoint.” Apple cannot afford to lose both developers and consumers in the same year.

The AI challenges at Apple are a mystery. How could one of half a dozen tech giants in the world miss the boat on what many think is the most critical software product in a generation? Only Apple insiders know for sure. It is indeed a black eye for Apple CEO Tim Cook and may be remembered as his most critical failure.

Apple’s problem is not just that it is slow in its AI product launches. It is that the competition is rolling out AI products so quickly. Google has integrated AI into its search engine, which has the largest footprint in the world. Microsoft is merging AI features into Windows. OpenAI has partnered with the most famous designer in tech history. Jony Ive is acknowledged as the person who designed the iPhone for Steve Jobs.

Another Apple AI problem is that it has not found a partner in China, which is the world’s largest smartphone market by far. There is no sign it is close to finding such a partnership.

It is hard to exaggerate what is at stake for Apple. Despite some success of its Services business, iPhone sales are the engine for Apple’s revenue and earnings.

Investors are left to wait to see if Apple can launch a strong AI product next year. Alternatively, it could be weak or delayed again.

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