Apple is catching up with the AI revolution: Dan Ives

As Big Tech companies reported earnings, they also revealed a massive wave of planned spending on AI projects and infrastructure. Some companies like Alphabet (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) have pulled ahead, while others, like Apple (AAPL), have faced mounting challenges.

Wedbush Securities Managing Director Dan Ives joins The Morning Brief to discuss what he calls "the fourth industrial revolution" in AI and Apple's advances on the front.

Ives states that Apple's annual Worldwide Developers Conference will be paramount for Apple: "I think it's probably the most important event for Apple that we've seen potentially in a decade because this is going to be [CEO Tim] Cook laying out the AI strategy on the services side for developers, what I believe is really the start of an AI app store in terms of how that's going to morph and then its proprietary AI technology in iPhone 16, which will launch in September."

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This post was written by Nicholas Jacobino

Video transcript

A I has been in focus this week as investors digest a slew of results from the likes of arm holdings, Taiwan Semiconductor and Sound Hound A I.

It's been a mixed picture especially when it comes to guidance.

But our next guest though saying that there is a tidal wave under way, there are some key names that are going to benefit for more on this.

We want to bring in Dan I.

Well, Bush Securities, senior equity analyst, Dan, it's good to see you.

So talk to me about this note that you just put out this morning.

The title of it almost says it all A I revolution spending tidal wave is well under way that's been seen in Q one results.

What is this then signal though about the out performance then of some of these names to come.

Look, I think it shows this revolution demonization is actually now starting and it's not just about godfather of A I Jensen NVIDIA and what Nadel is doing to Redmond now it's the rest of tech.

I I think names like service now, salesforce oracle, you could arm holdings.

I mean, th th those are just robust numbers, you're seeing it play out across other areas.

Pound here.

Sound hound.

And what and what I believe is gonna be the rest of the software and semis.

I think this fourth industrial revolution has begun.

How can investors best determine a healthy amount of spending on generative A I ambitions versus what seems unhealthy or perhaps over index capital allocation?

Well, if you look at, at, at these hyperscale players, Microsoft Amazon Google and then you, you analyze some of the spending that we're seeing from meta and others.

It's just begun.

I mean, we're not even in first inning, I'd say we're in the dugout in terms of where this is all going.

Now, in terms of over indexing, I think you have to own the right plays.

I think you have to, you have to have your plays in semis software and infrastructure.

And I think there's almost a basket approach to this.

But, but even if, if someone told you six months ago Dell would be an A I play.

You'd say, OK, you must have a really good Friday night, but look what's happening.

Look at Dell work and others.

Th this is a 1995 moment, not a 1999 moment.

Dan, one of the names that we've been talking about a lot when it comes to a I at least, most recently, not so much here over the last several months, but most recently it's been Apple questions about what exactly their A I strategy is going to look like we're expected to hear a little bit more at the big event next month.

But I'm curious from your perspective, what do you anticipate to hear from cooking company in terms of what their strategy is going to look like?

Look, I think it's probably the most important event for Apple that we've seen potentially in a decade because this is gonna be cook laying out the A I strategy on the services side for developers.

What I believe is really the start of A of an A I APP store in terms of how that's gonna Morph and then it's proprietary A I technology in iphone 16 which launched in September.

It was behind the scenes.

Were they behind when it came to to A I?

Yeah, but I think they've quickly caught up and you have the best install based 2.2 billion in the world.

So this is the start of A I coming to Cupertino does this compactor add matter Dan.

But for first of, for Apple to actually apologize is near as rare.

But I think it also shows they're under the microscope, Brussels beltway target on their back.

But when you make the best products in the world and you have the spotlight on you, that's what they're gonna do.

And an ad like this, I wanna, I wanna expect uh to make more of these, but Apple is apologizing for the best products in the world and, and that's essentially what they're doing.