Apple is set to report its fiscal first quarter earnings on Thursday, with Wall Street analysts expecting $138.4 billion in revenue and earnings per share of $2.68. The $3.7 trillion tech giant’s AI strategy will face intense scrutiny as investors compare its approach to other mega-cap tech companies reporting this week, including Meta, Microsoft, and Tesla.
Apple’s stock has underperformed, rising only about 10% over the past 12 months, significantly lagging the broader market and its Magnificent Seven peers. Shares traded around $255 on Wednesday, down about 1%. The company’s cautious approach to AI investment has raised questions among investors, as Apple has largely opted out of the massive capital expenditures that competitors have poured into AI infrastructure.
Instead of building its own AI infrastructure from scratch, Apple has partnered with Google’s Gemini to enhance its Siri voice assistant. This strategic alliance represents Apple’s bet on leveraging existing AI capabilities rather than developing everything in-house. The partnership announcement has set the stage for what analysts expect will be a major Siri refresh this spring and further AI announcements at the World Wide Developers Conference (WWDC) in June.
Wedbush analyst Dan Ives believes Apple stock could rally significantly if investors begin pricing in an “AI premium” similar to other tech companies. He estimates this premium could add $75-$100 per share to Apple’s valuation. Ives emphasizes that Apple needs to “lay down the blueprint to accelerate its AI strategy in 2026.”
Goldman Sachs analyst Michael Ng sees the recent stock weakness as a buying opportunity, with a price target of $320 per share—representing 25% upside. He argues that Apple’s partnership with Google Gemini and continued iPhone demand will demonstrate that the iPhone remains “the consumer device of choice for accessing new AI tools.”
Morgan Stanley’s Erik Woodring expects weak immediate stock performance following earnings but remains bullish for 2026, citing the upcoming Siri/Apple Intelligence upgrades and the potential launch of a foldable iPhone, which he calls “its most innovative iPhone in 10+ years.” However, UBS warns about rising memory costs that could impact margins, while SWBC’s Chris Brigati suggests Apple “faces the toughest hurdle” among the Magnificent Seven companies reporting this week.
Key Quotes
With the company finalizing the choice of Google Gemini to back Siri in its AI strategic push, it’s time for Apple to lay down the blueprint to accelerate its AI strategy in 2026 which leads up to a much-anticipated Siri refresh this spring and WWDC in June
Wedbush analyst Dan Ives emphasized the importance of Apple providing clear direction on its AI roadmap, highlighting key milestones investors should watch for in the coming months.
We believe no ‘AI premium’ which could be worth $75-$100 per share is factored into Apple’s stock at current prices
Dan Ives from Wedbush suggests that Apple’s stock is significantly undervalued compared to peers because investors haven’t yet priced in the potential value of its AI strategy, representing substantial upside potential.
Apple’s partnership with Google Gemini for Siri and continued iPhone demand growth against the backdrop of AI-native consumer hardware launches should demonstrate to the market that the iPhone will remain the consumer device of choice for accessing new AI tools
Goldman Sachs analyst Michael Ng argues that Apple’s strategic partnership approach will ultimately prove successful in maintaining the iPhone’s dominance as the primary consumer AI device.
Apple, however, faces the toughest hurdle: after a wave of upward estimate revisions, it’s the name most likely to struggle to clear the bar, especially as investors raise questions about its AI strategy
SWBC’s Chief Investment Officer Chris Brigati warns that among the Magnificent Seven tech companies reporting earnings this week, Apple faces the most challenging expectations and the greatest skepticism about its AI approach.
Our Take
Apple finds itself in an unusual position—playing catch-up in AI while maintaining its position as the world’s most valuable company. The Google Gemini partnership reveals both pragmatism and potential vulnerability. By outsourcing core AI capabilities, Apple preserves capital and accelerates time-to-market, but it also cedes control over a technology that competitors view as existential.
The 10% stock gain versus competitors’ stronger performance signals investor concern about Apple’s AI positioning. However, this may represent opportunity rather than weakness. Apple’s strength has always been integration and user experience, not being first to market. The company’s massive installed base and ecosystem lock-in provide a powerful distribution advantage once its AI strategy matures.
The real test comes with the Siri refresh and WWDC announcements. If Apple can demonstrate meaningful AI capabilities that enhance rather than replace the iPhone experience, the “AI premium” analysts discuss could materialize quickly. The foldable iPhone and AI-native features could create a powerful upgrade cycle that reignites growth and validates Apple’s measured approach to the AI revolution.
Why This Matters
This earnings report represents a critical inflection point for Apple’s AI strategy and its position in the rapidly evolving artificial intelligence landscape. While competitors like Microsoft, Meta, and Google have invested billions in AI infrastructure and captured significant market enthusiasm, Apple has taken a more measured approach that has left investors questioning whether the company is falling behind in the AI race.
The potential $75-$100 per share “AI premium” identified by analysts highlights how much value the market assigns to credible AI strategies. Apple’s partnership with Google Gemini represents a fundamentally different approach—leveraging existing AI capabilities rather than building from scratch—which could either prove prescient or problematic depending on execution.
For the broader tech industry, Apple’s AI direction matters enormously because of its massive installed base of over 2 billion active devices. How Apple integrates AI into its ecosystem will shape consumer expectations and potentially influence how hundreds of millions of people interact with artificial intelligence daily. The upcoming Siri refresh and WWDC announcements could either reassure investors that Apple remains competitive or deepen concerns about its AI positioning in an increasingly AI-driven technology landscape.
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