Gene Munster Says Apple Stock's Tepid Reaction To Strong Earnings Beat Comes Down To One Thing: Investors Want More AI Substance

Despite beating estimates and issuing upbeat guidance, Apple Inc. (NASDAQ:AAPL) shares hardly moved arsenic investors look for clearer grounds that artificial quality volition meaningfully thrust aboriginal growth, according to Deepwater Asset Management's Gene Munster.

Apple reported fiscal first-quarter gross of $143.76 billion, topping Wall Street expectations of $138.42 billion, portion net came successful astatine $2.84 per share, up of estimates of $2.66, according to Benzinga Pro.

Revenue roseate 16% twelvemonth implicit twelvemonth and net climbed 19%.

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The institution besides issued stronger-than-expected guidance, forecasting March-quarter gross maturation of 13% to 16% and gross margins of 48% to 49%. Apple shares, however, gained little than 1% successful after-hours trading.

Munster said the muted banal absorption reflects capitalist skepticism astir Apple's AI strategy, not dissatisfaction with its fiscal performance.

"I deliberation it's arsenic elemental arsenic investors privation to perceive much astir however AI is going to person a meaningful interaction connected their business," Munster said successful a post-earnings commentary.

He noted that Apple's results amusement customers are satisfied and proceed upgrading devices, but investors stay unconvinced without clearer AI milestones oregon timelines.

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Munster traced the contented backmost to Apple's unveiling of Apple Intelligence successful mid-2024, which raised expectations that AI would reaccelerate growth.

He said the institution aboriginal underdelivered connected those expectations, creating a credibility gap.

"That misstep was un-Apple-like," Munster said, adding that Apple has since shifted to a speech less, amusement aboriginal attack nether CEO Tim Cook.

During the net call, Cook offered constricted updates connected AI, saying lone that a revamped Siri powered by Apple Intelligence would get "this year," without further detail.

Munster highlighted a crisp rebound successful China revenue, up 38% twelvemonth implicit year, on with continued maturation successful Apple's installed base, present exceeding 2.5 cardinal progressive devices.