Investors closely monitored the activities of tech giants Apple (AAPL) and Microsoft (MSFT) during CES 2024 (Consumer Electronics Show), where, for a brief moment, Microsoft claimed the title of the most valuable company—a position not held since 2021. Microsoft’s strides in AI, from the acquisition of OpenAI to the excitement around ChatGPT, have been noteworthy, while Apple navigates challenges such as weaker iPhone demand, particularly in China.
Constellation Research Founder and Principal Analyst R “Ray” Wang joined Yahoo Finance to provide insights into Apple’s AI strategy and shed light on the latest technological innovations showcased at CES.
“What we’ve seen over the last couple of quarters is declining revenues, but profits are still increasing. That’s because the services equation of the rationale is actually growing in services—a lot more profitable than putting out a piece of hardware,” notes Wang regarding Apple. “I would say that we’ve probably seen those same trends. But we do supplier checks, and suppliers aren’t that nervous, in the sense that they’re saying… we’re going to see a decrease, mostly because we are in a super cycle.”
The AI Landscape: Microsoft vs. Apple
The excitement surrounding AI has significantly influenced Microsoft’s stock, with CEO Satya Nadella’s strategic investments paying off handsomely. However, Apple’s AI story is less explicitly articulated, despite its pervasive presence from chip-level integration to user experience enhancements.
Wang emphasizes, “Apple has never explicitly said they have an AI strategy, but we’ve all experienced what an ambient experience looks like. Their AI is embedded in the background, starting from the chip level all the way down to the user experience.”
Unveiling the AI Story: Apple’s Approach
As discussions revolve around Apple’s potential AI narrative, questions arise about whether the company will invest time, effort, and money in further developing these capabilities. Wang suggests that Apple may not adopt a grand strategy similar to Samsung’s recent Galaxy AI announcement at CES, emphasizing that Apple’s AI capabilities have been present all along.
CES Highlights: AI in Everyday Life
Shifting focus to CES, Wang notes the event’s evolution into not just a tech showcase but also an auto and mobility show. AI’s integration into various facets of daily life, including energy management, translation assistance, and smart buildings, is becoming increasingly evident. Additionally, AI is making strides in the health sector, enabling self-quantification and personalized insights.
The Future of AI: Augmenting Humanity
Looking ahead, Wang envisions a future where AI continues to augment humanity by providing situational awareness. He suggests that while AI currently enhances daily activities, the ultimate goal is to achieve precision and eventually move towards full automation.
Apple’s Earnings Preview
With Apple’s earnings on the horizon, concerns about weaker iPhone sales, particularly in China, have led to downgrades on Wall Street. However, Wang points out that declining revenues are offset by increasing profits, thanks to the lucrative services sector. Supplier checks indicate a sense of calm, as the industry anticipates continued momentum in the ongoing super cycle, driven by the transition to 5G and untapped markets like India.
In summary, Apple and Microsoft stand at the forefront of the AI revolution in consumer tech, each navigating unique challenges and contributing to the evolving landscape of technological innovation.
