Apple Stock: Could This Be Apple Inc.'s Biggest Weakness?

Apple Stock (AAPL Stock) Looking Forward to a Gamechanger

Apple Inc. (NASDAQ:AAPL) stock has been gaining ground off late and AAPL stock is trading at around $119.00-plus levels now. As the company and fans celebrate the 10th anniversary of the iconic “iPhone,” it is the right time to ponder what lies ahead for the company that has been defined by its smartphone. There seems to be a clear problem ahead for the company, which was conspicuous by its absence from CES 2017.

This problem has been mentioned in a report from The Wall Street Journal, which explains how the company seems to be lagging behind in executing its vision for artificial intelligence (AI)—specifically voice-based interfaces. (Source: “Why Apple’s Critics Are Right This Time,” The Wall Street Journal, January 8, 2017.)

AI is important to the company as this technology is most likely to disrupt Apple the same way as Apple disrupted the smartphone industry. AAPL stock has been riding high for too long on the phenomenal success of iPhone. AI-powered voice assistants are capable of replacing interactions with mobile devices. It does not mean that screens will not be needed anymore. However, users will become more inclined to talk to objects that can listen and interact with them. This is what is behind the success of Amazon.com, Inc.’s (NASDAQ:AMZN) voice-based assistant “Alexa.”

Apple appears to be way behind in this race and this is not good for Apple stock going forward. Amazon’s Alexa was a huge hit at the just-concluded Consumer Electronics Show (CES) at Las Vegas. A number of companies announced their devices that would be powered by Alexa.  

Alphabet Inc (NASDAQ:GOOGL) has also launched its “Pixel” smartphone that has “Google Assistant” running the show. The company executives were also there at the CES tech show and unveiled a number of devices that would be run on the Assistant. AAPL stock also came under pressure last year when the Pixel got better reviews than the company’s “iPhone 7.”

The Challenge for Apple Stock in 2017

Contrast this with the way things have been running at Apple Inc. on the AI front. Apple’s “Siri” has been around for a longer time but still could never grab the attention that its competitors have been able to command. The company has been on an acquisition spree to strengthen its presence in AI but still does not have a serious contender to Amazon, Alphabet, or even Microsoft Corporation (NASDAQ:MSFT).

As investors look forward to the quarterly results of Apple Inc., the whole focus will be on what plans the management has to keep itself ahead in the consumer technology space. Because AAPL stock is unlikely to grow much under the shadow of the iPhone now.


Editor’s Note: Hi, Mukta Samtani here. If you enjoyed this article, you can get more of my opinions and commentaries in our popular daily tech letter, Profit Confidential. Published daily, it’s FREE! Join us when you click here now.

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