On October 20, 2023, Gene Munster of Deepwater Asset Management provided insights into the recent executive shake-up at Apple Inc. (NASDAQ:AAPL). Munster sees this transformation as a strategic reset aimed at enhancing the company’s artificial intelligence initiatives. He believes that Apple’s stock will outperform its peers in the “Magnificent 7” group throughout the spring.
Munster shared his perspective during an episode of his “Pressure Points” series, emphasizing that the executive departures, including Chief Financial Officer Luca Maestri and Chief Operating Officer Jeff Williams, are not indicative of instability. Instead, he argues that these changes reflect a deliberate effort by CEO Tim Cook to inject new energy and ambition into Apple’s AI strategy. “These changes are for the good of the company,” Munster stated, highlighting Cook’s goal to prepare Apple for its next chapter in AI.
The year has seen several high-profile exits from Apple, including General Counsel Kate Adams and policy chief Lisa Jackson. Munster characterizes these departures as legitimate retirements, occurring at a typical age for high-ranking executives. He also noted that there has been aggressive recruitment from Meta Platforms, Inc. (NASDAQ:META), where longtime design chief Alan Dye reportedly received an enticing package worth around $500 million over five years.
Amidst these shifts, Munster mentioned that Apple’s former AI chief, John Giannandrea, appeared to leave under pressure as Cook sought a leadership change. To counteract these losses, Apple appointed Amar Subramanya from Microsoft Corp (NASDAQ:MSFT) as its new head of AI. Munster argued that this overhaul is essential for revitalizing the company’s culture and positioning it for its upcoming product launches.
Apple’s Competitive Edge in AI
Despite facing increased competition in artificial intelligence, Munster maintains that Apple’s extensive ecosystem of over 1.3 billion devices provides the company with a significant advantage. “Apple has a lot more time than people realize to figure AI out,” he remarked. He believes that early missteps in AI developments, such as with Apple Intelligence or the revamped Siri, will not be detrimental to the company’s long-term strategy.
Looking ahead, Munster expressed confidence in Apple’s market performance, predicting that iPhone sales will exceed estimates for the December quarter. He expects Apple’s shares to be the best-performing among the Magnificent 7 during the spring months. Recent reports indicate that Apple has strengthened its position in China’s premium smartphone market, with iPhone shipments rising by 37% year over year, driven by demand for the new iPhone 17 lineup.
In the fiscal fourth quarter, Apple reported revenue of $102.47 billion, slightly surpassing the projected $102.17 billion. The company’s earnings per share reached $1.85, exceeding analysts’ expectations of $1.76. According to Benzinga’s Edge Stock Rankings, Apple ranks in the 97th percentile for Growth and the 85th percentile for Quality, underscoring its robust performance relative to industry peers.
As Apple navigates these transitions, the focus remains on its strategic ambitions in AI and the potential for continued growth in a competitive landscape.
