Bank of America analyst Wamsi Mohan remains optimistic about Apple’s long-term AI prospects, emphasizing its focus on foundational updates, AI at the edge, and privacy, despite delays and cautious investor sentiment. He believes Apple’s strategic approach will ultimately position it as a leader in AI, with significant growth potential from expanding into new markets.
In the video, Bank of America securities analyst Wamsi Mohan discusses Apple’s recent developments in artificial intelligence (AI) and its overall strategy. Despite some disappointment among analysts following Apple’s latest WWDC event, Mohan remains optimistic and maintains a buy rating on the stock with a $235 price target. He emphasizes that Apple’s approach this year was more focused on foundational updates rather than flashy new product announcements, which he views as a prudent move to set realistic expectations and demonstrate progress in AI at the edge.
Mohan highlights that Apple’s WWDC was a “back to basics” event, primarily targeting developers and emphasizing improvements in AI tools within Swift and app integrations. He believes that Apple successfully delivered on these fronts, reinforcing its relevance in AI development without overpromising. The company is working on integrating AI more deeply into its ecosystem, particularly focusing on AI at the edge, which involves processing data directly on devices rather than relying solely on cloud-based solutions.
The analyst elaborates on the bull case for Apple, noting that the company is well-positioned to dominate AI at the edge, although this is taking longer than initially expected. He points out that Apple’s broader opportunity lies in expanding into new markets, potentially adding around $1 trillion in total addressable market (TAM) for physical goods and services that it is not currently involved in. This expansion could significantly boost Apple’s revenue streams and overall valuation in the future.
Regarding investor concerns about delays and disappointment, Mohan explains that Apple’s focus on privacy-centric AI solutions is a key reason for the slower development timeline. Unlike other AI tools like ChatGPT, Apple is prioritizing on-device processing and user privacy, which requires more advanced hardware and technological breakthroughs. He reassures that Apple is actively working on faster chips and memory improvements, which will enable more sophisticated AI functionalities, such as enhanced Siri capabilities and seamless integration with everyday tasks.
In conclusion, Mohan believes that Apple’s strategic focus on AI at the edge and privacy will ultimately pay off, positioning the company to lead in this space over time. While the current progress may seem slow, he sees the foundational work being laid now as critical for future breakthroughs. He remains confident in Apple’s long-term growth prospects, driven by its expanding ecosystem, technological advancements, and potential new markets, despite the recent short-term delays and cautious investor sentiment.