Apple Stock Balances AI Stumbles with iPhone Momentum

Apple’s performance on Wall Street remains a fascinating tug-of-war between optimists and skeptics. Over the past year, Apple’s stock has climbed by roughly $28, or about 12.5%, which is respectable though not extraordinary given the company’s stature. For investors who had hoped Apple’s entry into artificial intelligence would supercharge growth, disappointment lingers. The much-hyped Apple Intelligence initiative has yet to deliver the kind of seamless, transformative AI experience that rivals like Google and OpenAI are experimenting with.

Yet, despite this shortcoming, some analysts argue that Apple has managed to redirect attention back to the very product that built its empire – the iPhone.

Alex Kantrowitz, founder of Big Technology, explained in an interview with CNBC that Apple’s struggles with AI remain a genuine issue, but the company has cleverly “shifted the story” toward its strongest suit: hardware. “Apple is an excellent phone maker,” Kantrowitz stressed. Rather than chasing AI hype at the expense of reliability, Apple has doubled down on what it does best – designing and producing durable, user-friendly smartphones. This year’s improvements are particularly visible in the iPhone 17 series, which is reportedly drawing strong orders worldwide, alongside enthusiastic praise for the design of the ultra-thin iPhone Air.

Kantrowitz noted that customers are gravitating to these models not because of flashy software breakthroughs, but because of practical upgrades like better battery life, sturdier builds, and refined designs. That, he argued, is classic Apple: focusing on the tangible qualities that keep people lining up outside stores from New York to Shanghai. The excitement around hardware, especially in China where competition is fierce, has been critical in maintaining Apple’s relevance while its AI offerings lag behind competitors.

Still, not everyone is impressed. While Apple’s products continue to inspire brand loyalty, the company faces skepticism from parts of Wall Street. One key reason is the lengthening iPhone upgrade cycle. UBS reports that in the U.S., consumers now wait an average of 35 months before replacing their devices – nearly three years, which naturally slows revenue growth from hardware sales. Meanwhile, NVIDIA has overtaken Apple as the world’s most valuable publicly traded company, highlighting shifting investor enthusiasm toward AI-driven firms.

The Macquarie Core Equity Fund, in its Q2 2025 report, offered a blunt assessment: Apple underperformed the S&P 500 during the quarter, and the fund has reduced its Apple exposure by 50%. While acknowledging Apple’s impressive product line and strong consumer loyalty, the fund concluded that the company “is failing to grow at historical rates given the maturation of many key products.” In short, Apple’s greatest challenge may be less about execution and more about market maturity. With iPhones, iPads, and Macs now entrenched, spectacular growth becomes harder to sustain.

And yet, even with these criticisms, Apple’s stock remains resilient. Shares are within striking distance – just over 2% away – from setting an all-time high. This paradox captures Apple’s unique position: simultaneously criticized for slowing innovation and celebrated for producing some of the most reliable, desirable consumer technology on the planet. Whether Apple can reignite growth with AI or other new frontiers remains uncertain. But for now, the world’s most influential phone maker seems content to return to basics, reminding investors that sometimes bread and butter still sells.