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Apple Stock (AAPL) Is Floundering, and AI and China Are Making Everything Worse

Austin Smith

Published: January 23, 2025 8:26 am

24/7 Wall St. Key Points:

• Underwhelming iPhone 16 sales, AI-related concerns like misleading news aggregation, and a rising rivalry in China from domestic smartphone producers have lately caused Apple’s (NASDAQ: AAPL) shares languish.
• Given China’s large percentage of worldwide smartphone demand, greater China sales remaining stagnant year over year, a major issue for Apple.
• Critics, including Mark Zuckerberg, contend Apple’s innovation has stagnated following Steve Jobs as the business mostly depends on small tweaks to current products. 
• Apple’s best days may be behind it, but ‘The Next Nvidia’ stocks are just revving up and could be the biggest winners of 2025. Click here to learn more.

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Transcript:

[00:00:04] Douglas McIntyre: So some trouble for apple and Apple stock has not done well recently. There’s several reasons one just came out today And that is is that there is a news aggregation function in apple intelligence their ai thing That’s been spitting out false headlines. So that’s what I love about AI is is that?

[00:00:29] Douglas McIntyre: The things that company doesn’t pay attention to are the things that break. It’s like, well, how harder, how hard is headline aggregation for AI?

[00:00:39] Douglas McIntyre: Anyway.

[00:00:39] Lee Jackson: Like Siri spitting out just random you know? And, and it’s funny because I think we’ve talked about this to some degree that, that. The fourth quarters, delivery sales numbers for both Apple and Samsung were less than expected and

[00:01:00] Douglas McIntyre: Right. So there, what’s happening is is Apple and Samsung are losing ground and the, the Chinese local, we’ll call them local manufacturers

[00:01:11] Lee Jackson: Right,

[00:01:12] Douglas McIntyre: Ground in China. They’re not just gaining ground. They’re, they’re, they’re going to lap them this year on Samsung. And. If you don’t win in China, you don’t win in the period.

[00:01:24] Douglas McIntyre: There are a hundred there. There are a billion smartphones in China. There are 300 million in the United States. Okay. You could, so doing well in the United States doesn’t mean doing well in the most recent quarter, greater China sales for Apple were 15 billion flat, flat from the year before revenue was up 6% to over 95 billion. So you’re, you’re, you’re losing ground in China in terms of the share of your revenue. And now you’re losing ground to the local manufacturers. So it’s like, I don’t know how they recover that. The 16 is in the market now. So it’s not as if you could say, Oh gee, well there’s going to be another iPhone out next month and that’s where we’re going to take back share.

[00:02:16] Douglas McIntyre: I mean, you’ve now had the, the 16 has been in the marketplace for four months. And then Apple intelligence is supposed to be their play. The reason you buy an iPhone is, is the new, iOS 18 system that runs on the iPhone 16. That’s supposed to be,

[00:02:38] Lee Jackson: on the 15 as well,

[00:02:40] Douglas McIntyre: that is their super duper artificial intelligence launch.

[00:02:45] Douglas McIntyre: Well, they can’t aggregate headlines.

[00:02:48] Douglas McIntyre: they can’t aggregate headlines. I want to know what is it? So I think what’s happening with Apple right now is there’s a real erosion of confidence in the company. I think if you go back to September, September. You know, they really talked about how great the 16 was going to be.

[00:03:06] Douglas McIntyre: I think a lot of people bought into that. People sort of bought into the AI launch because most people hadn’t seen it yet,

[00:03:14] Lee Jackson: Which they had to wait on.

[00:03:16] Douglas McIntyre: Which they had to wait on. there was not evidence at that point that there was trouble brewing, in China. So you’ve gone from a period of what I would describe as, relative content about Apple shares to a relative discontent.

[00:03:34] Douglas McIntyre: And to me, Apple’s a sell now. I’m not a buyer of Apple at this price because I’m going to wait till earnings come out because that’s what’s going to really tell you that the people like the iPhone as much as they thought or was China good or bad?

[00:03:51] Lee Jackson: And what I find funny is when Mark Zuckerberg, of course, these guys have all changed their tune on everything, but he was out recently just giving the business to Apple, throwing huge shade at them about, you know, they haven’t done anything since Steve Jobs died and, you know, And the more I thought about it, I thought, you know, that’s right, because it’s been the first iPhone came out in 2007, I think. So it’s been, you know, 18 years and coming in on 20, they really haven’t had a new product. Nobody cares about iPods anymore, because You just stream audio from your phone. So that was something that, you know, they just tucked into there. So, you know, they’re never going to make a living on people buying 5,000 max. So, know, I, I think Zuckerberg, you know, I don’t think if you’re that rich, you really need to give the business to Tim Cook, but, I think he’s right on the lack of innovation since job died. And left is, it seems to appear to be gone.

[00:04:59] Douglas McIntyre: Yeah. Well, they say they’re now going to have a home devices that, you know, they’re going to somehow put artificial intelligence around your whole house. Their next, the home is their next, that’s their next market. You got Macs, you got the watches, you got the iPads, you got the iPhones. None of those are growing enough services.

[00:05:21] Douglas McIntyre: Their services business is growing. Okay. But their next, the next beachhead, according to them is the home. I don’t know what they’re going to do with my home. They’re going to make it a much more magical place.

[00:05:33] Lee Jackson: Well, but everything will be on a remote control or something. It’ll be just like now, where’s the remote control? It’s on your phone. Okay, where’s my phone?

[00:05:43] Douglas McIntyre: Where’s my phone? Well, here’s what to watch for. And here’s what to watch for. And we’ll come back to this when the quarter’s announced. Apple is very interesting. They put a PDF. Attached to their earning statement, open it up and it has a bunch of great things there, which include revenue by product and revenue by region.

[00:06:05] Douglas McIntyre: So I just want everybody to go in there when they get the press release. When you open that up, look at China, what they call greater China. Current quarter, quarter year ago, iPhone sales, current quarter, quarter year ago. Those two lines are going to tell you everything you want to know. So

[00:06:26] Lee Jackson: Let’s do this. Why don’t we come back after the earnings? I know you’ll find that number instantly and we’ll relate it to everybody if they don’t happen to get the data on that.

[00:06:37] Douglas McIntyre: They don’t get the PDF.