How Apple is borrowing from its 1980s playbook when it comes to AI

By Emily Bary

Oppenheimer sees compelling parallels between what Apple is doing in AI and its 1980s Macintosh strategy

Apple Inc. could be following a familiar playbook with its artificial-intelligence push.

The company's Apple Intelligence tagline is "AI for the rest of us," and that gives Oppenheimer analyst Martin Yang flashbacks to about four decades back, when Apple (AAPL) teased the Macintosh as a "computer for the rest of us."

"We see many parallels between Apple Intelligence and an Apple product from 40 years ago," Yang wrote in a note to clients. "Apple is setting a new standard for hardware and software experience for a technology implementation that can appear confusing, intimidating, and jarring for an average consumer."

Read: Apple offers a bullish lesson for Nvidia, even as the chip stock dips

And Apple is in a better spot now than it was in the 1980s, according to Yang. "Macintosh, with its graphic interface and mouse, set a new standard of user-friendliness in the early days of personal computers," he wrote. "What's different this time is that Apple has built a much stronger moat across its own products."

Yang is getting increasingly optimistic about Apple's stock prospects as the company prepares to roll out its new AI software, and he boosted his price target to $250 from $200 in a Friday report. The new target is 17% above current levels.

The company's plan for consumer AI, tied in with its ecosystem, could mean that Apple is able to accelerate revenue and earnings growth faster than Wall Street expects, he said. Apple's ecosystem is a major advantage, in Yang's view, since factors such as the tight links between the company's hardware and its software that can drive power efficiency.

Though AI is a software feature, it's limited to newer models, and that could drive tailwinds for the company's hardware lineup. "We believe the excitement over Apple Intelligence can potentially accelerate hardware replacement and enable market share gain for iPhone, iPad and Mac," Yang wrote.

See also: Apple is bucking the trend on AI - and that could help its stock

Apple's stock fell 1.6% in Friday's session, though it closed out the first half with a 9.4% rise. That compares with a 14.5% gain for the S&P 500 SPX over the first half.

-Emily Bary

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06-29-24 0839ET

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