Apple's strategic positioning in its second half-century: is AI Apple's biggest gamble?

Apple, the iPhone maker, first became the world’s most valuable company in 2011 after surpassing Exxon Mobil, and held that position for most of the following years, though at times it was eclipsed by Microsoft or Alphabet. The competitive landscape has since shifted: Apple now sits behind Nvidia, a company that has risen strongly on the back of its role in the AI wave. Since the start of 2026, Apple’s stock has fallen nearly 7%.

Services, not iPhone sales, is the margin focus

While the iPhone remains Apple’s primary revenue engine, analysts say the Services segment will be the key driver of margins in the current cycle. Apple’s Services ecosystem includes the App Store, iCloud, Apple Music, Apple Pay and the newly launched Apple Business platform, which the company is using to expand recurring revenue.

In this context, Apple has begun to more aggressively monetize advertising, a business area it had previously approached cautiously. The company has expanded advertising placements on Maps and the App Store and said it would continue increasing the number of ads on these platforms from the end of last year.

Hardware adjustments aim to widen the user base

At the same time, Apple has adjusted its hardware strategy to broaden its user base. It launched the MacBook Neo, a more affordable computer, while halting the Mac Pro line, the high-end model that had limited appeal.

The shift underscores a move away from a hardware-dependent model toward optimizing Apple’s services ecosystem, where each new user can generate long-term cash flow.

Siri upgrades and the AI question

Siri, once a pioneer, is now widely viewed as lagging behind. Apple says it will upgrade Siri this year, but analysts characterize it as a “catch-up” step rather than a move likely to create a competitive edge.

Despite continuing to dominate the US smartphone market and with Services delivering more than $100 billion in annual revenue, Apple appears slow in the AI race. Rivals such as Microsoft, Google and Amazon have spent hundreds of billions to build AI infrastructure and develop models, while Apple has not yet made a clear mark in generative AI.

Apple has about 2.5 billion devices in use worldwide, creating a large potential base for monetizing through apps and services. However, Wall Street is waiting for evidence that Apple can deliver another breakthrough beyond the iPhone. Apple has cancelled the Apple Car project, and Vision Pro remains a niche product. The market direction is increasingly seen as AI-enabled hardware, potentially through wearables, robotics, edge computing, or a product Apple has not disclosed.

“I think the big question is what comes after iPhone,” said Ben Bajarin, CEO of Creative Strategies. “These are areas that have matured and we don’t know what comes next, but we know it will likely be a form of AI-enabled hardware.”

Where Apple has AI today—and where it is missing

According to Macworld, Apple has used AI across its products, typically labeling those capabilities as “machine learning.” The company also has custom AI inference hardware called the Neural Engine in its chips.

But in generative AI—such as ChatGPT, Copilot, Bard, image generators (DALL·E, Midjourney, Stable Diffusion), music creation (Amper, MuseNet) and code generation (GitHub Copilot)—Apple still appears to be on the outside.

Recent reports suggest Apple is accelerating development of AI devices around Siri, including smart glasses; a pendant-style wearable; and AirPods with cameras. Analysts say smart glasses could be the strongest candidate for an “iPhone successor” device, though few expect near-term products such as an upgraded Siri or a folding iPhone to deliver a revolutionary push.

Partnership with Google and implications for Siri

In January 2026, Apple partnered with Google to support its AI features, including the forthcoming Siri upgrade. Tom’s Guide notes that the collaboration could allow Siri to interface with AI chatbots beyond ChatGPT, such as Gemini or Claude. That would enable users to interact with those chatbots via Siri voice commands rather than using a separate app.

Nevertheless, in-house AI software remains essential for new products and marketing. Siri’s delays are also said to affect the launch of other devices including Apple HomePad and smart glasses. In the meantime, AI extensions are expected to complement Apple’s internal AI development with third-party software, potentially helping Apple scale its AI services faster than it could alone.

The added AI features are expected to support iPhone sales—Apple’s main revenue source—and help reduce the risk of users migrating to Android.

CNBC also notes that the market may be waiting for Apple to recreate the “Think Different” spirit that helped the company rebound in the late 1990s.