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Despite beating estimates and issuing optimistic guidance, Apple Inc. (NASDAQ:AAPL) shares barely moved as investors look for clearer evidence that artificial intelligence will significantly drive future growth, according to Gene Munster of Deepwater Asset Management.
Apple reported fiscal first-quarter revenue of $143.76 billion, beating Wall Street expectations of $138.42 billion, while earnings came in at $2.84 per share, ahead of estimates of $2.66, according to Benzinga Pro.
Revenue was up 16% year over year and profits were up 19%.
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The company also issued stronger-than-expected guidance, forecasting revenue growth for the quarter of 13% to 16% and gross margins of 48% to 49%. Apple shares, however, gained less than 1% in after-hours trading.
Munster said the stock’s muted reaction reflects investor skepticism about Apple’s AI strategy, not dissatisfaction with its financial performance.
“I think it’s as simple as that investors want to know more about how AI will have a significant impact on their business,” Munster said in post-earnings commentary.
He noted that Apple’s results show customers are satisfied and continue to upgrade devices, but investors are unconvinced without clearer AI milestones and timelines.
Munster traced the problem back to Apple presentation of Apple Intelligence by mid-2024, raising expectations that AI would re-accelerate growth.
He said the company later failed to meet those expectations, creating a credibility gap.
“That misstep was un-Apple-like,” Munster said, adding that Apple has since moved on to a less talkative, more laid-back approach under the CEO. Tim Cook.
During the earnings call, Cook offered limited updates on AI, saying only that a refresh Siri powered by Apple Intelligence would arrive “this year,” without further details.
Munster highlighted a strong rebound in revenue from China, up 38% year over year, along with continued growth in Apple’s installed base, which now exceeds 2.5 billion active devices.
