Apple misses on AI in 2025

Joe Kernen (Co-anchor of Squawk Box) 00:00.640

Apple is fighting for its very survival. The $4

Steve Kovach (Technology Correspondent) 00:04.840

trillion dollar company is struggling. Steve

Joe Kernen (Co-anchor of Squawk Box) 00:06.640

Kovac uh joins us now. Did you write that?

Steve Kovach (Technology Correspondent) 00:09.440

I did not write that. Let's talk about this poor $4 trillion company. Oh my god. Make a break. Make a break here. No, but

Joe Kernen (Co-anchor of Squawk Box) 00:16.000

I'm I'm going to switch what was I I'm switching back to a Motorola flip

Steve Kovach (Technology Correspondent) 00:19.200

phone. You should, the razor? That's That what what I I was mean

Joe Kernen (Co-anchor of Squawk Box) 00:21.520

cool Because they work well. I was like I was like Maxwell Smart.

Becky Quick (Co-anchor of Squawk Box) 00:25.240

One of the best decisions that I ever made was to go into Apple in a big way. No,

Joe Kernen (Co-anchor of Squawk Box) 00:30.320

Late.

Becky Quick (Co-anchor of Squawk Box) 00:31.080

Late, but the amount of money that they made

Joe Kernen (Co-anchor of Squawk Box) 00:34.680

He'll He'll make the same decision on Bitcoin.

Steve Kovach (Technology Correspondent) 00:36.360

Yeah. He'll He'll come He'll come around to that eventually. But let's Here's what what's really going on next year. And the stakes are pretty high here. There's AI Mulligan that's going to happen over at Apple. We're expecting this to happen in the spring. You guys might

Steve Kovach (Technology Correspondent) 00:48.480

remember back in March, Apple said that amazing version of Siri with all this AI stuff, it's going to be able to do all sorts of great things. They have to delay it. It's going to be delayed until probably March of 2023. six, that's what most people expect. And in the meantime,

Steve Kovach (Technology Correspondent) 01:03.000

this year they've gone through so much. The first half of the year, which is dominated by tariff talk. We know how that ended up, but because if you look after the August 6th moment in the Oval office when Tim Cook was there with the president announcing that $600 billion U.S.

Steve Kovach (Technology Correspondent) 01:16.800

investment, the stock is up about 35% in that time period. So it might look like it's one of the Mag 7 laggards, but that tariff weight on the stock is off. So now they have to focus on AI. They have the team in place, at least so they say after after getting rid of John

Steve Kovach (Technology Correspondent) 01:30.880

Gianandrea. He was the AI boss over there. But look, here's the way I'm thinking about it going into next year. This doesn't just have to be good. It has to be amazing and so amazing that people are going to go out there and buy new iPhones just to get this new version of Siri.

Steve Kovach (Technology Correspondent) 01:46.240

You guys might remember a year ago, December going into January of 2025, Apple was hitting all-time highs day after day in anticipation of this AI-driven supercycle that all the analysts thought was going to happen. Obviously that never materialize, this is their chance to do it

Steve Kovach (Technology Correspondent) 02:02.680

again. And look, if it's not good enough to sell new phones, it's going to be a nice to have thing on your phone, but it's not going to be a sales driver or a sales growth driver. But it does enable a few things like new kinds of products. There's these rumors that Apple might

Steve Kovach (Technology Correspondent) 02:17.040

take on Meta with AI power glasses, it could do stuff with AirPods, and so many other things that it could enable. But it what investors really need to focus on is if it's going to drive those iPhone sales because Apple They give this away for free. ChatGPT charges you 20 bucks

Steve Kovach (Technology Correspondent) 02:33.040

a month. This is going to come free with your iPhone.

Joe Kernen (Co-anchor of Squawk Box) 02:35.000

There's a lot of companies that are totally dependent on their strategy and their success at maneuvering into this AI world. Apple has an ecosystem and it it's got its own world already and it can use AI can be very important to supplement and to help Apple move along, but it's

Joe Kernen (Co-anchor of Squawk Box) 02:53.960

not existential like it is for some of these

Steve Kovach (Technology Correspondent) 02:56.800

other companies. And that kind of got proven out this year. So you might remember a year ago the iPhone 16 cycle. Sales were down. It It was kind of a crummy year for the iPhone. That was the year that AI came out on there. People didn't want it. People didn't like it. It didn't

Steve Kovach (Technology Correspondent) 03:09.800

work as cool as people thought it was going to work. This year, no AI. The iPhone 17. They just Sales are strong. They're growing. When I was with Tim Cook the last earnings report, he was like beaming. He was so excited. People love the iPhone 17. It's because people just like

Steve Kovach (Technology Correspondent) 03:24.240

cool phones. Yeah. And they want a cool guy. I got the iPhone Air. It has a cool new design. You have the Pro.

Becky Quick (Co-anchor of Squawk Box) 03:29.040

I I got the Pro and I actually want a bigger one. You want

Steve Kovach (Technology Correspondent) 03:31.600

the max? Well,

Becky Quick (Co-anchor of Squawk Box) 03:32.320

yeah, I'm getting too old to type Oh, fair.

Joe Kernen (Co-anchor of Squawk Box) 03:34.360

I always like the I always like the biggest screen. But

Steve Kovach (Technology Correspondent) 03:37.320

so my point is the AI doesn't necessarily matter. It but it all comes down to moving phones. So if you think AI is going to you know be a boon for Apple, it's only going to do that if one they decide to change their mind and say we're going to charge a subscription for this

Steve Kovach (Technology Correspondent) 03:51.520

thing or two it's so good everyone with the 15 or lower is going to be excited and they feel some phone mode to go out there and get one.