Wedbush analyst Daniel Ives outlined three steps that iPhone maker Apple (AAPL) needs to undertake to prove it is a serious artificial intelligence (AI) player. The top analyst believes that Apple’s AI strategy is “invisible,” even though it is one of the toughest tech players. He noted that Apple lacks a clear and solid AI strategy compared to its peers, Microsoft (MSFT) and Alphabet (GOOGL).
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Ives maintained his “Buy” rating on AAPL stock with a price target of $270, implying 17.7% upside potential from current levels. AAPL stock has gained roughly 12% in the last week, marking a “good week for Apple bulls after a frustrating year,” he noted.
Ives is a top analyst on TipRanks, ranking #817 out of the 9,946 analysts tracked. He boasts a 49% success rate and an average return per rating of 9.70%.
Apple Needs to Prove its AI Strategy
Ives highlighted three steps that Apple CEO Tim Cook and the company need to take over the coming months “to prove to developers and investors this will not be a melting ice cube AI strategy and make sure Cupertino is not watching this AI Party through the windows.”
- Apple Must Acquire Perplexity AI – First and most importantly, Ives believes Apple must acquire Perplexity AI soon, which specializes in AI search engines. He noted that he would be comfortable even if Apple paid $30 billion or more to buy Perplexity AI since the acquisition would add immense value to Apple’s AI strategy and fit very well with Siri.
- Hire Fresh and Innovative Talent from Outside – Ives pointed out that Apple’s management team needs a refresh by bringing in some innovative talent from outside. He added that even if Apple has to pay higher compensation to bring in AI talent, it would be meaningful to change the AI innovation culture within. Meanwhile, Ives believes that “Cook will be CEO of Apple until at least 2030, but there need to be major changes underneath.”
- Double Down on Gemini Partnership – Ives wants Apple to double down on its partnership with Google’s Gemini. He urges Apple to fully integrate Gemini into its iPhone ecosystem despite ongoing regulatory hurdles and the DOJ trial. Ives stated that Apple cannot depend solely on OpenAI’s partnership and needs to bet on Gemini. “Time is not on Apple’s side and they need to take some big shots now and doubling down on the Google partnership is the right move,” Ives added.
To conclude, Ives believes that undertaking the above three steps will enable Apple to remove the “black cloud over the stock” and help prove the company has a robust AI strategy.
Is AAPL Stock a Buy?
On TipRanks, AAPL stock has a Moderate Buy consensus rating based on 16 Buys, 12 Holds, and one Sell rating. The average Apple price target of $235.14 implies 2.5% upside potential from current levels. Year-to-date, AAPL stock has lost 8.2%.
