The Foldable iPhone Is a Distraction
Recent reports of potential delays to Apple's foldable iPhone sent shares dipping, but investors fixating on that headline may be looking in the wrong direction entirely. While Apple has undoubtedly invested billions into the product design and engineering of a foldable device, this is not where the company's future revenue growth will come from.
The foldable iPhone, expected to arrive alongside the iPhone 18 later this year, offers consumers more choice — perhaps functioning more like an iPad when unfolded. But the honest assessment is that it is unlikely to be a major driver of new device adoption, particularly in North America. People who use Android devices are not suddenly going to switch ecosystems because Apple now offers a foldable option. Samsung and others have been in that space for years. The foldable form factor also arguably runs counter to much of Apple's longstanding design philosophy — the minimalist, elegant vision that has defined the brand since its earliest days.
The iPhone itself has evolved from a discretionary luxury item a decade ago into an absolute consumer staple. That transition is already complete. The real question for investors is not about hardware form factors — it is about what Apple does with AI.
The Genius of Apple's AI Playbook
Apple has seemingly fumbled its early AI efforts, and critics have been quick to point that out. But there is a compelling analogy worth considering: Apple is like a favorite local restaurant. Even if a few meals are underwhelming, loyal customers do not abandon it overnight. They give it time. And Apple has an extraordinarily loyal customer base that is not switching to Samsung or any other competitor anytime soon.
This loyalty gives Apple something invaluable: a long runway to get AI right.
What makes Apple's approach particularly clever is its capital discipline. Apple is one of the very few major technology companies that is not pouring tens of billions of dollars into AI infrastructure. Instead, it is letting everyone else — Google, Microsoft, Meta, Amazon — build the foundational AI infrastructure, and then integrating those capabilities into its own software and ecosystem.
The analogy is striking: Apple is letting everybody else build the roads while it keeps the cars. The company still controls the primary way most individuals will interact with AI on a daily basis — through the iPhone, through Siri, through the apps on their devices. That consumer touchpoint is enormously valuable.
The App Store as an AI Revenue Engine
One often-overlooked dimension of Apple's AI positioning is the App Store. Every time a consumer subscribes to ChatGPT, Claude, or any other AI service through an iOS app, Apple takes a cut of that subscription revenue in the first year. As AI integrates deeper into daily life and more consumers adopt AI-powered subscription services, this revenue stream will grow substantially — without Apple having to build any of the underlying AI models or infrastructure itself.
This is a remarkably capital-efficient way to participate in the AI boom. Apple does not need to win the AI model race. It simply needs to remain the dominant platform through which consumers access AI tools.
The Google Partnership and the Future of Siri
The partnership between Apple and Google on AI capabilities, particularly around Siri, is a strategically wise move — even if some investors question whether Apple is ceding ground by relying on a partner. The logic is straightforward: Google is investing billions into AI research and development. If those investments pay off and integrate well with Apple's ecosystem, both companies benefit enormously.
The updated Siri represents both a potential catalyst and a genuine risk. But the broader opportunity is about bringing AI to the masses. Despite all the hype, most people are still not using AI tools like ChatGPT beyond parlor tricks. The integration of meaningful AI capabilities through Siri and the broader Apple ecosystem is how AI adoption will reach mainstream consumers — people who do not think about artificial intelligence on a daily basis but who use their iPhones constantly.
Positioning Among the Tech Giants
Among the so-called Magnificent Seven stocks, Apple and Google stand out as the two names with the most direct and compelling stories for how AI translates into actual revenue. Nvidia remains the bellwether for AI sentiment, but its stock functions more as a proxy for how investors feel about AI overall — and with broader economic uncertainty, that makes it more volatile.
Apple, having pulled back in recent trading, now offers a more attractive valuation, with price-to-earnings ratios coming back in line with long-term targets. For long-term investors, this creates an opportunity.
The timeline for the next bull run in these names — whether it materializes in three months or over the next year — depends on macroeconomic conditions and global developments. But the thesis is clear: Apple and Google are positioned as the two biggest winners in the next phase of AI-driven growth, each for complementary reasons. Google is building the AI infrastructure and models; Apple is controlling the consumer interface through which billions of people will use them. Together, they represent both sides of the AI value chain — and both stand to profit enormously.