Apple Dives into AI: How Tim Cook’s Strategy Excites Analysts

Apple Inc. AAPL CEO Tim Cook’s first mention of AI during the December quarter earnings call has Wedbush’s Dan Ives excited about the iPhone maker’s prospects going forward.

What Happened: Ives thinks despite headwinds in markets like China, Apple can navigate them as it looks to speed up its AI efforts. He says Apple is entering a “new growth cycle,” with AI and iPhone being its two primary growth drivers.

“We view Apple like Meta 18 months ago… entering a major growth cycle despite Street giving no credit,” Ives said in a post on X.

Cook underscored another major statistical achievement during the earnings call – Apple now has a total installed base of 2.2 billion across iPhones, iPads, Macs and other devices.

This provides Apple with a substantial user base to tap into to give its AI efforts a boost.

While Apple has been working on AI for several years now, it has not been as vocal about it as a few other Big Tech companies like Microsoft Corp. MSFT, Alphabet Inc.’s GOOG, GOOGL Google or Meta Platforms Inc. META.

Cook’s mention of AI during the earnings call also excited Deepwater Asset Management’s Gene Munster.

“Bingo! Tim Cook used the letters ‘AI’ in prepared remarks for the first time, saying AI is important to Apple’s future.”

“I still believe we will see a generative AI model at WWDC. Welcome Apple to generative AI steamroller.”

Coming to the iPhone business, Apple reported a 6% increase in iPhone 15 sales compared to the iPhone 14 series, helping it grab a 64% market share in the U.S.

On the other hand, the company witnessed a 12% drop in iPhone sales in China amid rising competition from Huawei.

But it’s not all gloomy – Ives expects iPhone sales to grow again in China in the second half of the year.

Why It Matters: Apple has also published an AI breakthrough in a research paper, elaborating on how it can run large-language models on devices with limited memory. What this means is that it now has a way to bring on-device AI to older iPhones as well.

This is significant progress for the company since has not exactly been generous in terms of memory on older iPhones, unlike modern Android smartphones which come with 50% or more memory than iPhones – in the case of recent flagships like the OnePlus 12, the memory is up to twice as much as it is on Apple’s top-tier iPhone 15 Pro Max.

AAPL Price Action: Apple shares closed at $185.85 on Friday, down 0.54% in the last 24 hours. In after-market hours, they fell further to $185.11, down 0.4%, according to Benzinga Pro data.