"The Toll Collector on the Consumer AI Highway": Ives Highlights Apple's Advantage in the Race

In the race for artificial intelligence, Apple has taken on the role of a middleman between AI developers and consumers: this important role has propelled the company to second place in the world by market capitalization, behind only Nvidia, even without direct participation in the AI race. This was stated by Dan Ives, a well-known tech optimist who spent eight years at Wedbush Securities, according to Yahoo Finance. The corporation controls access to billions of popular devices and is transforming its ecosystem into a universal gateway through which all third-party services and technologies pass, Ives believes.

Apple's ability to dominate a key mid-range segment through the sale of popular devices such as the iPhone and iPad forms the basis of Ives' long-term "bullish" outlook.

“In our view, Apple will become the toll collector on the highway of consumer AI. Although Apple has struggled with its AI strategy over the past few years and has made numerous strategic moves, the team [of Apple’s new CEO, John] Turnus has finally entered the race,” Ives said. The company’s vision for artificial intelligence will become a powerful element of Apple’s corporate strategy in the coming years, he added.

According to Ives, offloading AI development costs to third-party companies will be well worth it. In this case, all players will have to overcome the corporate barrier that has been created—just as app developers are required to pay Apple a standard 30% commission for every transaction on its platform.

Ives noted that this is undervalued and not reflected in Apple’s stock price: he believes that another $75 should be added to its value, as AI capabilities will encourage users to upgrade their devices and drive a 15% increase in revenue from services. His estimate implies a 10% increase in the stock price relative to the most recent closing price. On October 9, the stock fell by about 2%.

“Most of the debate centered on whether Apple had entered the generative AI market too early or too late. “We believe the far more important question is how well the company will be able to deliver useful AI to an audience of more than 2.5 billion active devices and 1.5 billion iPhones,” says Ives.

“If a company managed to put U2 in everyone’s pocket (without asking permission), it shouldn’t be underestimated,” Yahoo Finance concluded ironically. This refers to a 2014 promotion when Apple automatically added the Irish band U2’s album to the music libraries of half a million device owners worldwide—for free and without asking for their permission.

In early October, Morgan Stanley lowered its price target for Apple shares from $360 to $355, while maintaining its “Buy” recommendation (Overweight rating). This target implies a 5% decline in the company’s stock price relative to the most recent closing price.

Overall, analysts are positive about the manufacturer's stock: 25 out of 44 recommend buying it. Thirteen recommend holding it in a portfolio, and six recommend selling it.

This article was AI-translated and verified by a human editor