Apple’s Future in Question Amid AI Disruption Concerns

Apple (NASDAQ: AAPL) has emerged as a top-performing stock over the past five years, climbing over 160%. With a market capitalization exceeding $3.1 trillion, it stands as one of the world’s most valuable companies. This success largely hinges on its iPhones and iPads, complemented by its diverse ecosystem of products and services.

However, concerns are surfacing about potential disruptions to Apple’s dominance. An executive from Apple has suggested that there may be challenges ahead, urging investors to reconsider long-term ownership of the stock.

Are iPhones Becoming Obsolete?

The technology landscape is evolving rapidly, largely due to advancements in artificial intelligence (AI). Such changes raise questions about the relevance of current devices in the next five to ten years.

Eddy Cue, Apple’s senior vice president of services, recently testified at an antitrust case against Google (owned by Alphabet). He remarked, “You may not need an iPhone 10 years from now,” suggesting that AI-driven wearables like smart glasses could replace today’s smartphones.

This shift presents both opportunities and challenges for Apple. In the first three months of 2025, the company reported net sales of $95.3 billion, with $46.8 billion attributed to iPhone revenue. Growth in this area is faltering, as iPhone sales have only risen by 2% in the last quarter.

The long-term trend towards displacing traditional smartphones offers consumers reasons to move away from the iPhone. Apple may need to innovate significantly to sustain its market position, but recent years have not demonstrated a strong capacity for such innovation.

Is Apple’s Business at Risk?

Apple has not kept pace with advancements in AI, postponing the rollout of its Apple Intelligence features for iPhones until 2026. Although some basic AI functionalities are available, more comprehensive capabilities, such as enabling Siri for multi-app tasks, will not be implemented until next year.

The increasing availability of chatbots that can execute complex tasks puts Apple further behind. As the market evolves, the gap between Apple and its competitors could widen. While the company emphasizes user safety and privacy—critical aspects of AI—its struggles to keep pace may pose future challenges.

The sluggish growth rate could worsen, particularly if iPhone sales continue to falter, potentially impacting the sales of iPads and subscriptions to services.

Currently, there are over 1 billion active iPhones globally. However, Android holds more than 71% of the smartphone market. While iPhones are often seen as status symbols, they may lack practicality compared to Android devices, which are generally more affordable and customizable. Should Apple fail to adapt to AI advancements, its market share could be further jeopardized.

Is Apple Stock Still a Strong Buy?

Anticipating the technological landscape over the next decade is challenging. Although Apple’s lack of significant innovation has not hindered its growth in recent years, the emergence of AI may increase pressure for the company to deliver new advancements.

AI is an area for investors to watch closely. Presently, Apple is performing well, and there’s no immediate cause for alarm. Nevertheless, Cue’s remarks about the future of the iPhone underline serious concerns about the company’s reliance on its existing devices without innovation. This consideration remains a significant factor for potential investors.

If you’re holding Apple shares, you might not need to sell immediately, as it still represents a viable stock. However, such risks should be evaluated for long-term strategies. For growth-oriented investors, exploring other tech stocks positioned to capitalize on AI advancements may be more advantageous.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.