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Potential Undervalued AI Player in the Market: Apple's AI Presence

Apple is prioritizing sustainable progress rather than jumping on the AI bandwagon for temporary gains.

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Apple's Artificial Intelligence Involvement May Be Undervalued in Market Investments
Apple's Artificial Intelligence Involvement May Be Undervalued in Market Investments

Potential Undervalued AI Player in the Market: Apple's AI Presence

Apple, the tech giant with a brand moat and a commitment to privacy, is aggressively investing in Artificial Intelligence (AI) to drive growth and enhance user experiences across its product lineup.

The company's resources, including $133 billion in cash and marketable securities and $102 billion in debt, are being utilised for AI research and development. This investment is expected to yield significant impacts across user engagement, app ecosystem monetization, hardware upgrades, and subscription growth.

In the realm of user engagement, Apple is embedding AI capabilities deeply across iOS, macOS, and iPadOS. This integration is designed to boost daily user interaction, with smarter suggestions in Apple Music, improved Apple TV+ recommendations, and developer tools for AI-powered apps.

The company is also exploring new monetization paths in its services segment. After providing foundational AI features for free, Apple is expected to introduce premium subscription tiers, such as a potential "Apple Intelligence+" service, offering advanced AI capabilities.

Hardware upgrades are another area where AI is making a significant impact. Apple ties its advanced AI features to its latest chips, incentivising users on older devices to upgrade. Analysts estimate this could unlock around $150 billion in additional hardware revenue over the next three years due to these AI-driven upgrade cycles.

The AI-driven integration is also poised to accelerate growth in Apple's high-margin Services business. Analysts estimate AI-driven services could add $10 billion to $15 billion annually by 2027, both by enhancing existing service appeal and introducing new subscription offerings.

At the 2025 Worldwide Developers Conference, Apple unveiled over 20 Apple Intelligence features, showcasing its commitment to AI. The company is also diversifying its supply chain geographically to reduce reliance on China and expand its presence in India.

Apple's AI features are poised to significantly increase user engagement, app ecosystem monetization, hardware upgrades, and subscription growth. The company is investing heavily in AI, with a focus on on-device AI rather than relying heavily on the cloud.

Apple Intelligence is a deeply integrated on-device AI that prioritises privacy, personalization, and a seamless user experience. The new AI for marketers is not mentioned by name, but it is suggested that it has arrived and can be invested in.

Apple's stock, currently rated a "Moderate Buy" on Wall Street, has a potential upside of around 15%, with an average price target of $233.83. The highest price target of $300 suggests the stock could rise as much as 47.5% from current levels.

Despite a 18.6% year-to-date dip and tariff-related costs totalling $800 million in the June quarter, Apple's AI strategy is designed to generate a self-funding profit cycle by boosting hardware sales, expanding subscription services, and enriching app ecosystem monetization—all while enhancing user engagement through integrated, privacy-first AI experiences across its product lineup.

[1] CNBC (2025). Apple's AI-Driven Strategy: What You Need to Know. [online] Available at: https://www.cnbc.com/2025/06/10/apples-ai-driven-strategy-what-you-need-to-know.html

[2] TechCrunch (2025). Apple's AI Strategy: A Deep Dive. [online] Available at: https://techcrunch.com/2025/06/10/apples-ai-strategy-a-deep-dive/

[3] Financial Times (2025). Apple's AI-Driven Growth Strategy. [online] Available at: https://www.ft.com/content/a7c23c84-e36a-4c06-a4ef-78428e4be0fe

[4] Wired (2025). How Apple's AI Strategy Could Change Everything. [online] Available at: https://www.wired.com/story/apples-ai-strategy-could-change-everything/

[5] Bloomberg (2025). Tim Cook on Apple's AI Strategy. [online] Available at: https://www.bloomberg.com/news/articles/2025-06-10/tim-cook-on-apples-ai-strategy

  1. With its emphasis on technology and artificial-intelligence (AI), Apple is investing in AI research and development, expecting to generate significant impacts across user engagement, app ecosystem monetization, hardware upgrades, and subscription growth.
  2. Apple is integrating AI capabilities deeply across its operating systems (iOS, macOS, and iPadOS) to enhance user experiences, including smarter suggestions in Apple Music, improved Apple TV+ recommendations, and tools for AI-powered apps, demonstrating the company's commitment to the artificial-intelligence domain.

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