By Apple Inc. (NASDAQ: AAPL) may emerge as one of the largest beneficiaries of on-device artificial intelligence (AI) in the months ahead, according to Bernstein analyst Mark Newman.
In a note published Monday night, Newman initiated coverage of the iPhone maker with an Outperform rating and set a $290 price target, citing the company’s unique positioning at the intersection of hardware and software.
Apple shares edged up 1.9% to $241.22 on Tuesday following the report.
Apple positioned as “gateway to the intelligence revolution”
Newman described Apple as the “gateway to the Intelligence Revolution,” highlighting its ability to integrate on-device AI directly into its products.
Unlike cloud-based models, on-device AI runs locally on smartphones and computers, enabling faster responses, greater privacy, and potentially new hardware demand.
Apple already deploys a mix of on-device AI and private cloud compute through its Apple Intelligence platform, which supports applications such as auto-generated text responses and custom Genmojis.
However, the analyst noted that the company remains in a delicate position: “Apple is positioned to gain the most from on-device AI, and is also the most at risk if it is poorly executed.”
Competitors including Microsoft and Intel are also advancing on-device AI capabilities, particularly in the AI PC category.
But Apple’s scale — supported by a global installed base of more than one billion active users — makes it a standout candidate to capture value if its execution proves successful.
Investor concerns and the road ahead
Despite optimism about long-term AI opportunities, Apple stock has underperformed broader markets in 2025.
Shares have declined 4.5% year-to-date, compared with a 12% gain for the S&P 500.
Analysts and investors alike have pointed to the company’s slow rollout of AI features as a key concern.
Current Apple Intelligence tools, such as smart message replies, have yet to generate significant enthusiasm.
By contrast, rival offerings in smartphones and PCs have showcased more advanced AI functions.
The most closely watched development remains Apple’s enhanced Siri chatbot, which is expected to debut next year.
Until then, the central question for investors is whether Apple’s AI efforts will serve as a catalyst for product upgrades — or simply act as a defensive measure to keep customers from migrating to competing platforms.
Strong user base offers strategic cushion
Even with these execution risks, Apple’s loyal customer base gives it considerable strategic resilience, Newman argued.
“We continue to view Apple’s core asset — the most lucrative and sticky 1 billion users — as highly attractive, which provides significant potential upside from AI if executed well,” he wrote.
He added that Apple customers tend to exhibit high brand loyalty and are less focused on advanced AI features compared with competitors’ users, giving the company additional time to refine its offerings.
For investors, Apple’s next wave of AI products could be pivotal.
If the company succeeds in leveraging its ecosystem to roll out effective on-device AI, Bernstein believes Apple could regain momentum and secure a leading role in the rapidly evolving AI market.
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