Apple (NASDAQ: AAPL) is no longer the most valuable company in the world, a title it held for quite some time before being displaced by Nvidia last year. However, it’s still a global tech leader, and even though it’s not at the forefront of artificial intelligence (AI), it has an edge in the space. Here’s why.
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In the fiscal 2026 first quarter (ended Jan. 25) report, CEO Tim Cook said that Apple now has 2.5 billion active devices. Cook said it’s “a testament to incredible customer satisfaction for the very best products and services in the world.”
Apple provides this “installed user base” with access to AI, giving it high exposure to AI engagement. Apple fans expect to find and use Apple intelligence on their devices, and the company has released a slew of exclusive AI services included with new iPhones, as well as some older versions that have enough processing power.
The market had been disappointed with advances in Apple Intelligence last year, since it didn’t appear that the company was keeping up with its mega-tech peers like Amazon, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft, and Meta Platforms. These companies are all developing their own large language models (LLMs), and the market has been anticipating Apple’s entry into deeper AI.
While the market soured on Apple’s delayed AI, its AI peers have announced ever-increasing investments in their platforms. With Amazon’s capex expected at $200 billion in 2026 alone, the market is starting to see the wisdom of Apple’s approach. Apple recently announced a deal with Alphabet to use its Gemini LLM to drive its own foundation models for the Apple Intelligence platform, and it’s going to launch an updated Siri in the coming months. It’s reportedly going to pay Alphabet $1 billion annually for the use of the LLM, a fraction of what its competitors are investing in AI.
Apple has a lead in hardware, and the Apple Intelligence platform integrates into the unmatched Apple ecosystem, led by the iPhone. iPhone sales increased a fantastic 23% year over year in the first quarter, reassuring investors that it still has loads of loyal fans, and total sales increased 16%, demonstrating that Apple is still in its prime. Despite what had been perceived as a lag in AI, fans were clearly satisfied with whatever features Apple had packed in.
finance.yahoo.com
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