Cook’s AI legacy at stake in final developer conference

This makes WWDC more than just a consumer-facing AI demo.

Apple needs to convince customers that Siri is finally useful and developers that it could be a platform worth developing.

“Cook has in some respects completely missed on AI, but by spending efficiently and not over-committing to capital expenditures and still having that surface layer, they are actually in a position where they can continue to miss for a while and still be successful at some point in the future,” Newman said.

He added that this was “literally the last hurray” for Cook to ignite the breakthrough before Ternus took over.

This becomes a potential advantage for Apple, which could close the AI ​​gap through partnerships rather than shouldering the huge data center spending burden faced by its Big Tech peers.

The Information reported this week that Apple’s overhauled Siri is on track for September and will run partially on Google Cloud. Nvidia chips, but CNBC has not independently confirmed these details.

This will mark a big change for Apple, which has long preferred to own basic technologies. But investors can tolerate this trade-off if Apple offers a faster path to a working AI product.

The partnership could also make sense for Google, Newman said, because Apple-scale tokenization would provide an important proof point for Gemini and form the basis of a search partnership that has long been lucrative for both companies.

There’s also the question of whether Apple is underinvesting.

Stephanie Link, chief investment strategist at Hightower, said Apple has historically been conservative with cash, opting for buybacks rather than large acquisitions or heavy investments. He said discipline has helped margins, but he also finds it frustrating that Apple isn’t a larger participant in what rivals describe as a once-in-a-generation technology shift.

Dan Niles, founder of Niles Investment Management, said Apple is “ridiculously late on AI.”

Niles gave Cook high marks for his supply chain management and political prowess, calling him a “supply chain god” but noted that his most ambitious recent product launch, the Vision Pro, was a flop.

Still, Niles added that while he was encouraged by Apple’s increased spending on research and development, he viewed the next phase of product implementation as critical.

Lebenthal said he has a market-heavy position in Apple but is “not that excited” about WWDC being used as a catalyst. He said the stock is at the top end of its valuation range and it’s hard to buy more unless it sells.

UBS said it expects Apple to focus on artificial intelligence at the event, but does not expect WWDC to be a positive catalyst for shares unless there are surprises. The firm highlighted expected features such as Gemini integration, connections to third-party models via “Extensions”, a dedicated Siri app, iCloud sync for chats and personalization, and screen awareness.

UBS left its iPhone forecasts unchanged, saying other expected features were useful but unlikely to significantly increase demand.

“I know Tim Cook wants to get to the top,” Link told CNBC. “But I would say it performed well in the quarter. The quarter went well and was better than expected.”

Larger consumer testing will occur in September, when Apple is expected to launch its new iPhone lineup and possibly the upgraded Siri experience.

Gene Munster, managing partner of Deepwater Asset Management, said he expects Apple shares could sell off around WWDC, but that won’t change the long-term thesis if Apple shows investors it understands where AI is going.

“They don’t have to do it right,” Munster told CNBC. “They just need to show that they understand this and know where this is going. That means AI products that people actually want to use, that they don’t currently have, and products that take advantage of Apple’s unique capabilities.”

The bar is “surprisingly high” for a company that hasn’t yet been able to use AI properly, Munster said. He said Apple needs to demonstrate a chatbot experience that is at least as good as Gemini or ChatGPT. The more important test is whether Apple can demonstrate how personal and useful the tight integration with its hardware makes AI.

“We can’t have Genmoji 2.0,” Munster said. “This won’t fly.”

This puts Cook in a difficult position heading into WWDC. A meaningfully more useful Siri could help reset Apple’s AI narrative and move the iPhone upgrade story into the fall.

Anything that appears incremental, delayed or too dependent on partners risks reminding investors of the execution Apple is trying to keep in the past.

For a CEO who has built Apple into one of the world’s most valuable companies through operational discipline, supply chain mastery and service expansion, the latest developer conference may come down to something much less familiar: Whether Apple can make Siri feel like the future.