Apple (AAPL): What’s in Store for the Stock?

Guggenheim's Rob Cihra cheers as Apple "aggressively" invests in artificial intelligence, seeing competitive advantage here.


As Apple Inc. (NASDAQ:AAPL) makes a dynamic push into artificial intelligence (AI), Guggenheim analyst Rob Cihra commends the tech titan for bringing on board Google’s former head of AI John Giannandrea. For Cihra, this serves as a key play for Apple to surpass the competition, as Giannandrea will bring all his experience to bolster the company’s machine learning (ML) and AI strategy.

Therefore, the analyst reiterates a Buy rating on AAPL stock with a $215 price target, which implies a close to 24% upside from current levels. (To watch Cihra’s track record, click here)

Apple’s AI/ML development teams lead the pack from where Cihra stands, considering its R&D budget, which the analyst wagers will shoot past $14 billion this year- “tripling over the past 5yrs,” and important new hires joining on board.

“We see Apple’s recent hiring of Google’s AI chief as a major move to redouble its position among the leading developers of Machine Learning (ML) technology, and continue to believe Apple is ultimately set up to differentiate by pushing to run more AI at the Edge of the network, on-device, […] We track Apple job postings and have seen a 3X increase in mentions of Siri and ML engineering positions over the past 4 months,” writes Cihra.

Natural language understanding could prove significant for Apple’s race to catch up to Amazon’s Alexa and Google Assistant, which is a specialty of Giannanadrea: “We presume Siri will be Mr. Giannandrea’s initial focus, as we believe natural language understanding (NLU) is one of his specialties (e.g., his quote from Google’s own NLU team blog says ‘Understanding language is the holy grail of machine learning’). And that seems key, since we think Apple was early launching Siri with the iPhone 4s back in 2011, has since been challenged to keep pace with Alexa and Google Assistant, and yet maintains a strong point of leverage in Siri being the DEFAULT AI assistant on iPhones, so thereby accessed by hundreds of millions of active users every month.”

Ultimately, the analyst anticipates more EDGE processing in Apple’s future so that the tech titan can carry out AI and ML straight to the iPhone, the Apple Watch, Airpods, Apple TV, and the HomePod- all of which will allow the titan to make the most of its iOS and product-centric model.

TipRanks indicates AAPL is a stock that has magnetized mostly bullish attention. Out of 29 analysts polled in the last 3 months, 16 are bullish on the tech titan while 13 remain sidelined. With a return potential of 9%, the stock’s consensus target price stands at $190.55.