Apple (AAPL) is falling behind in the AI arms race, not just to upstarts but also to its fellow Magnificent Seven giants.
While Mark Zuckerberg openly gripes about Meta’s AI progress, he’s not sitting still.
Meta is throwing massive paychecks at OpenAI researchers and just bought a 49% stake in Scale AI for $14.3 billion in a move that signals just how serious Zuck is about catching up.
Meanwhile, Apple is stuck in neutral. Despite having the third-largest market cap in the world, it has no clear AI strategy and seemingly no real urgency either.
The biggest miss was its flagship product.
When Apple unveiled the iPhone 16 last fall, it promised Apple Intelligence. It's a new generative AI layer that would essentially turn Siri into an LLM-powered assistant. But that Siri upgrade never materialized.
In fact, Apple now says we won’t see an AI-powered Siri until 2026.
In a rare admission of failure, the company’s software chief Craig Federighi told The Wall Street Journal that “we weren’t able to achieve the reliability in the time we thought.”
Things went downhill from there.
Bloomberg soon reported Apple is weighing a total pivot, potentially ditching its own in-house models in favor of third-party tech from OpenAI or Anthropic. That’s a huge red flag for a company that once prided itself on building everything internally.
Is Tim Cook still the right leader for Apple’s next era?
Apple’s struggles have reignited debate over CEO Tim Cook’s legacy and whether he’s the right person to lead Apple through the most important tech shift in a generation.
“By any normal metrics he has had a wildly, wildly successful tenure,” Craig Moffett of MoffettNathanson told Fortune. He’s right, under Cook, Apple went from a $300 billion company to a $3.2 trillion titan.
But even Moffett, one of the few analysts with a “sell” rating on the stock, admits Apple’s innovation engine has cooled.
“They haven’t produced a major new product outside of possibly the earbuds in a decade,” he said. “Apple has done far more to innovate process than it has product over Tim Cook’s tenure.”
Investors seem to agree. Apple stock is down 15.6% year-to-date, underperforming the S&P 500’s 7.1% gain. Over the past year, it’s down 5.8%.
Meanwhile, internal shakeups are adding fuel to the fire.
COO Jeff Williams is retiring after 27 years, and Apple’s top AI executive, Ruoming Pang, just jumped ship to Meta, reportedly for “well over” $200 million. Within weeks, Pang poached two of Apple’s senior AI researchers: Mark Lee and Tom Gunter.
If Apple wants to stay relevant in the AI era, Tim Cook may need to take a page from Zuck’s playbook and start spending like he means it.
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