Apple shares in tough spot as WWDC 2025 Fails to Impress on AI

Apple WWDC 2025: Underwhelming AI showing

At last year’s Worldwide Developers Conference (WWDC), Apple unveiled Apple Intelligence - its suite of AI features - in an effort to catch up with the competition, sparking hopes of a device upgrade cycle to access new AI capabilities. What followed, however, was a fragmented and slow rollout of these features, including delays to a more personalised, AI-powered Siri. As a result, Apple has fallen behind in the race for AI supremacy, while Big Tech peers move ahead with massive investments.

Concerns over Apple’s lag persist, as artificial intelligence took a back seat at this year’s WWDC conference 2025, despite some progress ^[1]. The iPhone maker opened up its on-device Apple Intelligence foundation model to developers and expanded its partnership with OpenAI. It also introduced more AI-powered tools, such as live translation and image search. However, Apple failed to showcase any major breakthrough capable of sparking market excitement, continuing to play catch-up with Android features already offered by Samsung and Google. Notably, Apple also declined to provide a timeline for the Siri upgrade, deferring it to the coming year.

Even though the AI showing was underwhelming, WWDC still had important announcement to enhance the already sticky ecosystem and offer Apple users reasons to cheer. It unveiled a major software redesign called “liquid glass”. This will change the look of its devices with iOS 26, while giving the iPad more of a Mac feel and improved multitasking.

Apple faces innovation gap amid rising competition

Apple practically created the smartphone market with the iPhone two decades ago, transformed the tablet space with the iPad fifteen years ago, and popularised wearables with the launch of the Apple Watch in 2015. However, it has not significantly innovated since. Its most recent major push - the Vision Pro headset - has failed to achieve mass appeal.

The generative AI lag underscores a broader lack of innovation that contrasts sharply with rivals who are advancing on multiple fronts, chipping away at Apple’s strengths. Samsung has been quicker in weaving AI into its smartphones, while expanding its wearables and fitness lineup with a smart ring. It is also developing a Vision Pro competitor and teasing a lightweight AR glasses product. ^[2]

Meanwhile, China rival Xiaomi threw Apple off the top spot in wearables in Q1 according to Canalys ^[3], it created a custom 3nm flagship smartphone chip and unveiled its own AI large language model. Crucially, Xiaomi made a successful entry into electric vehicles (EVs) last year – a market Apple failed to crack.

Existential threats from tariffs & regulatory scrutiny

As Apple navigates an increasing difficult environment, tariffs and regulatory scrutiny pose existential threats. Although it got temporary relief from the 90-pause of Trump’s reciprocal tariffs ^[4] and the exclusion of smartphones ^[5], challenges still persist. Its manufacturing is located “primarily in mainland China”, along with India, Japan, South Korea, Taiwan, and Vietnam ^[6] - all facing higher levies than before Trump’s return to the White House. The US President warned of 25% on all non-US made Apple products ^[7], limiting the company’s options for mitigating the impact.

At the same time, Apple’s lucrative “Walled Garden” business model is under threat due to regulatory scrutiny. With a court decision to block appeal to the ruling on the Epic case, Apple must stop charging commission on payment links within its apps.  ^[8]

Apple troubled by weak demand and slow growth

Apple’s lack of innovation, rising competition, and strained Sino-US relations are affecting demand for its products. The new tariff regime and regulatory changes could further dent profitability and weaken global demand.

Sales in China - a key market - fell 2.26% year-on-year in Q2 FY25 (period ended March), reinforcing concerns about structural demand issues. Meanwhile, overall revenue growth remains sluggish. Revenues rose just 5% year-on-year in Q2 FY25, and management expects a similar pace in the current quarter, according to the last earnings call ^[9]. In stark contrast, Xiaomi’s revenues surged nearly 50%, boosted by its EV segment.  ^[10]

Apple expects tariffs to add $900 million to its costs, while regulatory changes to the App Store could further erode margins. This raises the prospect of price hikes, which may hurt demand amid a challenging macroeconomic environment and weakening consumer confidence.

Apple stock vulnerable after WWDC 2025 AI disappointment

The tech giant had chance to regain control of the narrative at WWDC, but that did not materialise. The AAPL stock price dropped on Monday after the announcements failed to impress markets. 2025 looks more like a gap year for Apple in AI, with its lag highlighting a broader innovation gap as rivals advance.

This AI shortfall, combined with tariff threats and regulatory changes, continues to weigh on Apple’s growth outlook amid an uncertain macroeconomic backdrop. Consumer discretionary spending on premium devices like iPhones may remain under pressure.

Apple shares are down nearly 20% this year, having missed May’s Magnificent Seven and Nasdaq relief rally. The existential threats its faces can sustain the weakness, leaving it vulnerable to steeper declines towards last year’s low (163.30).

Source: www.tradingview.com

On the other hand, the lower valuation can renew the appeal of the stock. Even though the upside is technically challenging, a move above the 200-day EMA could negate the bearish bias and bring all-time highs back into view.

Even if Apple is currently an AI laggard, it still has the resources, data, and installed user base to catch up. Moreover, it may not need to lead in AI — strong brand loyalty means users aren’t likely to jump ship, especially in the absence of a game-changing AI product from rivals. Its robust financial and market position enables it to withstand regulatory adversity. And if new tariffs apply to all US imports equally, Apple could even emerge as a relative beneficiary.