Apple AI integration will 'evolve' user experience, drive value

Apple's (AAPL) Worldwide Developers Conference (WWDC) showcased the tech giant's latest innovations in generative AI and its integration across the company's product lineup. CFRA Research senior equity analyst Angelo Zino and Neuberger Berman managing director Dan Flax join Market Domination to discuss the implications of these groundbreaking developments.

Zino expresses his enthusiasm, noting that he's "pretty impressed" with the new announcements made at Apple's WWDC event. He highlights the significant AI capabilities unveiled alongside the company's partnership with OpenAI, describing it as "a major upgrade." However, he acknowledges it "remains to be seen" whether these features will prompt customers to upgrade.

Flax, on the other hand, supports purchasing Apple shares, citing the company's "continued execution on the product cycle." He sees continued growth into 2025 and believes that with new AI-integrated features, "the user experience is going to evolve," not only creating more valuable products but also enhancing the company's overall value.

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This post was written by Angel Smith

Video transcript

Today's a big day for two of the largest names in the S and P 500 nvidia trading at a far lower price tag per share after enacting a 10 for one stock split on Friday.

And today, of course, Tim Cook unveiling his company's vision for A I Apple Intelligence with little help from chat G BT.

We're taking a look at each stock in our Yahoo finance playbook and joining us now to discuss is Dan Flax Newberger, Berman, senior research analyst and Angelo Zino CFR, a research senior equity analyst.

Guys.

Welcome both to the show.

Angelo.

I'll start with you.

Uh You know, listen to Angelo, if you were an Apple investor, this is a date you had marked on your calendar for, for months.

This was Apple's big software show and Tim Cook.

He did take the stage, Angelo.

He, he kind of revealed, laid out the company's A I vision here and strategy as, as a financial analyst.

Comp come the company, Angelo, what, what did you make of it?

Yeah.

Listen, I I thought it kind of went as expected.

So um no, not, not h you know, horrible or anything like that.

But listen, this was a name that kind of ran 20% into, um, you know, into the event over the last kind of five weeks or so.

So, you know, the fact that you're not seeing any type of movement, um, you know, after the event shouldn't be a surprise to most.

But that said, I mean, listen, I think, you know, overall we were pretty impressed with what they announced.

I mean, theory in this respect, got kind of really got a major upgrade.

I think you kind of look at um you know, some of the other features that they announced, I mean, a lot of it kind of incremental in nature.

But um you did see a lot of kind of A I capabilities that were announced actually during the event before they even started talking about um A I for instance, you know, in terms of their calculator, uh their new calculator app within um you know, their, their I ipad ecosystem.

So um overall, I I thought it was pretty good.

We did see that chat G PC announcement, of course, alongside theory that was also expected.

So, um overall, I think you saw a major upgrade here.

Um will it kind of en entice new consumers to kind of go out and buy um that new iphone 16 later this fall, I think remains to be seen?

Yeah.

And really, that's a big question, isn't it?

Dan?

I mean, we heard analysts going into this event, calling it hugely important that this is the most important product announcement, at least for the company right now, Dan that said, is it a reason to buy Apple shares?

I think the reason to buy Apple shares is their continued execution on the product cycle.

Uh in terms of the iphone continued growth of the install base.

And I think we see better growth later this year into 2025.

If we step back and think about the story here, it's this continual reinvention.

Think about the ipod over 20 years ago now with Apple Intelligence getting, I think a lot better the user experience is going to evolve and I think it will the the device and the broader ecosystem will become even more valuable.

And so it's this integration of hardware software and services which we saw today.

And I think we'll see more when they launch iphone 16 in the fall.

So we continue to like the name Angelo back to you.

They also announced his partnership with open A I Angelo.

I'm curious what you think?

Um What do you think that economic relationship looks like between those two parties?

Which way you think the money is flowing?

Angelo?

Do you think Tim Cook is sending it to Sam Altman or Sam Altman is sending it to Tim Cook?

Yeah, I, you know, I, I think, you know, to an extent, you know, it might be some sort of, you know, usage based type of um, relationship going on there.

I, I, to be honest with you, I don't really know necessarily kind of how the money flow is going.

I don't think Apple is, you know, paying open A I or, you know, open A I A penny for any of this.

But, um, you know, I, I think ultimately there, they're going to be benefits that uh both Apple as well as open A I can re reap from the partnership.

Dan, does this indeed drive the up uh the upgrade cycle?

I think it has the potential over the next several quarters to help with upgrades, the the new capabilities will will largely be available on the iphone 15 pro.

And of course, the newer devices that come out in September, the the broader environment remains difficult, but the the key for Apple is the installed based growth even as replacement rates lengthen, it's over a billion devices.

And what we've seen from users is this continued mix up uh to the pro and the pro max.

And I suspect that will continue as we look into the months ahead.

And so the new capabilities, we'll see what killer apps uh uh develop over the next several months.

Uh Apple is giving their developers new tools, new frameworks to, to really create, build and and and ultimately monetize in the Apple ecosystem.

And that in my view is foundational to the Apple growth story