Despite being seen as somewhat behind in the artificial intelligence (AI) model race, Apple's "device strategy" is drawing renewed attention on Wall Street. As doubts grow over the profitability of AI investments, Apple's strategy of prioritizing the iPhone, its own chips, and its operating system (OS) over massive AI models is being reassessed as a strength. While U.S. tech stocks have undergone sharp corrections, Apple set a record high, and analysts expect iPhone sales will not decline even though the company has signaled price increases due to soaring memory chip prices.
According to Yahoo Finance and other outlets on the 13th, Apple closed at $317.31 on the New York Stock Exchange that day, up 0.63% from the previous trading session. Apple set another record high even as U.S. tech stocks, particularly in the semiconductor sector, underwent an overall correction. Apple's stock has risen approximately 17% this year, the highest return among the so-called "Magnificent 7" stocks, which include Nvidia, Microsoft, Alphabet, Amazon, Meta Platforms, and Tesla.
Wall Street investment banks (IBs) have expressed optimism, including by raising their price targets. Citigroup raised Apple's price target from $315 to $365 on the day. The average price target of three firms—Evercore, KGI, and Bank of America—was projected at $353, about 13% higher than the current level. In its report, Bank of America said Apple could become a winner in agentic (assistant-type) AI and forecast that AI-related revenue would reach $15 billion to $30 billion by fiscal year 2030.
Paradoxically, Apple is drawing renewed attention precisely because it did not pour money into AI models. Instead, it has proven monetization through an on-device strategy that combines AI centered on devices such as the iPhone.
Rather than joining the race to develop massive AI models requiring enormous capital, Apple chose a strategy of strengthening its AI competitiveness centered on hardware, its OS, and its device ecosystem. It focused on combining the competitiveness built around the iPhone, its own chips, OS, and App Store with AI services. In this process, it is actively utilizing external AI models such as Google's Gemini to reduce cost burdens and quickly apply the latest AI technology to its products.
Dan Ives, an analyst at Wedbush, set a price target of $400, the highest on Wall Street, and assessed that "20% of the world's population will access AI through Apple devices."
As a result, Apple's financial burden is lighter than that of its competitors. According to Bloomberg consensus, Apple's capital expenditure (CAPEX) for fiscal year 2026 is expected to be $12.2 billion (about 18 trillion won), only about one-tenth that of Google, Amazon, and Meta. In contrast, free cash flow (FCF) is projected to reach a record high of $139.7 billion (about 208 trillion won), up more than 40% from the previous year. This stands in contrast to other big tech companies, whose free cash flow is expected to decline as they invest enormous sums in building AI data centers.
IT-focused media outlet TechCrunch noted that "Apple's cautious AI strategy is beginning to look like the most financially sound choice," adding that "even amid growing doubts over the profitability of AI investments, it is generating enormous profits with far less investment than its competitors."
As the axis of AI competition shifts from model performance to hardware, the hardware design and manufacturing capabilities Apple has accumulated stand out. The trade secret infringement lawsuit Apple recently filed against OpenAI further highlighted this advantage, as what OpenAI sought was Apple's undisclosed product designs. In particular, in terms of "orchestration"—the coordinating ability to grasp an individual's usage context across multiple devices and help them use it most conveniently—the assessment is that no player is as strong as Apple, which has developed personal devices for 50 years.
John Thornhill, a columnist for the Financial Times (FT), assessed that "the more efficient AI models become, the greater the proportion that will run on devices such as smartphones," adding that "with approximately 2.5 billion Apple devices in use worldwide, Apple is in the most advantageous position to integrate and provide various apps and AI agents."
Apple's device ecosystem, spanning the iPhone, Mac, iPad, and Watch, holds a solid customer base. It is several steps ahead of big tech companies such as Meta and Google, which are only now touting AI glasses and watches. While the iPhone 18, set to launch in September, is likely to be priced higher than its predecessor, Goldman Sachs analyzed that sales would be maintained.
However, there are also many counterarguments that concerns surrounding Apple's AI strategy have not been fully resolved. The strategy of relying on Google Gemini instead of its own AI model makes it difficult to lead AI innovation in the long term. How iPhone price increases stemming from rising memory chip prices will affect medium- to long-term sales is also cited as a variable. The prevailing view so far is that the import of Chinese-made memory chips, which Apple is actively pursuing, is also unlikely to actually materialize.
