artificial intelligence

Asymco Bulletin is a digest of all the work we have published for the week ending Mar 15, 2026.

Research

The most brilliant move in corporate history?

In a bold departure from its Big Tech peers, Apple sidestepped the $650 billion AI infrastructure spending frenzy. While Amazon, Google, Microsoft, and Meta funneled cash into data centers, bleeding cash flow and adding debt, Apple maintained a consistent $14 billion capital budget. This strategic choice reflects Apple’s belief that AI models are rapidly commoditizing, as evidenced by DeepSeek’s $6 million model rivaling $100 million counterparts. Instead of building proprietary models, Apple licensed Google’s Gemini, reserving the option to switch vendors as superior models emerge.

Apple’s genius lies in leveraging its ecosystem—2 billion devices transforming into a distributed AI powerhouse. Apple silicon on device enables local AI processing, bypassing the need for colossal server farms. This approach not only conserves capital but also amplifies customer loyalty, as Apple uniquely protects privacy. Ultimately, Apple bets on owning the customer experience, positioning itself to thrive regardless of infrastructure ownership. →

Is Apple Pivoting?

Apple's recent product launches, including the 17e and MacBook Neo, have sparked speculation about a strategic shift towards low-end markets. However, this view overlooks Apple's fundamental approach to market segmentation, which eschews simplistic price categorizations. Instead, Apple focuses on the "job-to-be-done," understanding that consumer purchases are driven by desired outcomes rather than affordability alone. This perspective reveals that performance and quality are crucial, transcending income levels. For instance, affluent individuals may opt for simpler devices, while budget-conscious consumers might invest in high-performance tools to meet specific needs, like content creation.

Historically, Apple has aimed to deliver superior experiences to a broad audience, refusing to compromise on quality with budget-friendly products like Chromebooks. While cost can limit access, as seen with the Vision Pro, Apple prioritizes profitability as a validation of its value proposition. The MacBook Neo exemplifies this ethos, leveraging efficient mobile chipsets to redefine laptop capabilities at a competitive price point. This innovation blurs the lines between mobile and traditional computing, underscoring Apple's commitment to crafting products tailored to diverse tasks. Ultimately, Apple's strategic depth, powered by Silicon advancements, positions it to serve an expansive global market by addressing a wide array of functional needs. →

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Nota Bene

Rosenblatt Lifts Price Target on Apple by $1, Maintains Netural Rating → On March 5, Rosenblatt's Barton Crockett slightly raised Apple's price target to $268 while maintaining a Neutral stance, optimistic about Apple's budget product launches and steady high-end performance, despite trading at a modest premium compared to peers, as analysts foresee robust revenue growth for FY2026. →

How many employees does Apple have? What do they do? → Apple, despite its marketing reputation, is fundamentally an engineering powerhouse with nearly half its workforce dedicated to engineering roles, driving its substantial revenue growth and global employment expansion. →

First footage of X-Plane 12 on Vision Pro → X-Plane 12 on Apple Vision Pro leverages ARKit to seamlessly integrate physical controls into a mixed reality flight simulation streamed from a Mac, showcasing advanced professional-grade AR capabilities. →

iPhone production in India increases by 53% in 2025 → Apple's strategic shift to ramp up iPhone production in India by 53% last year, aiming not just to sidestep tariffs but to cultivate a vast new customer base, underscores a long-term vision mirroring its successful penetration of the Chinese market. →

Qualcomm faces loss of Apple business, rated ‘Underperform’ by Bank of America → Qualcomm's dominant era in smartphone chips wanes as Apple and others pivot to internal solutions amid costly licensing disputes. →

MacBook Neo May Boost Revenue By 0.5% While Expanding Into Student Market – Gene Munster → The MacBook Neo, targeting both education and broader markets, could modestly boost Apple's revenue by $2 billion annually without impacting margins, potentially revitalizing the Mac segment akin to Covid-era growth. →

Apple’s AI Hardware Blitz Could Send The Stock 33% Higher, Says Wedbush’s Dan Ives → Apple's hardware blitz prioritizes product refreshment over AI emphasis, potentially setting the stage for future growth, though its $350 stock target faces external market challenges. →

China’s Android shipments plunge as inventory builds in contrast to iPhones: Jefferies → "China's Android market faces a perfect storm of rising inventories, soaring memory costs, and renewed iPhone strength, hinting at a potential tipping point." →

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From $267 to $268

On March 5, TheFly reported that Barton Crockett of Rosenblatt Securities increased the price target on Apple Inc. from $267 to $268, maintaining the Neutral rating on the iPhone maker.

Crockett remains positive on Apple following the company’s recent event, in which it launched its MacBook Neo, tapping into the lower end of the laptop market. Apart from that, a lower-end iPhone 17e also adds to the company’s lineup in the budget hardware category. The analyst also mentioned that Apple’s high-end products account for a modest percentage of build-to-order, which could lead to in-line performance with its March-quarter guidance.

On January 30, Reuters reported that, according to the LSEG, Apple expects Q2 FY2026 revenue to increase by 13% to 16%, compared with analysts’ 10% growth rate. Despite strong performance, Crockett highlighted that Apple trades at a meaningful premium.

A majority of 52 analysts out of 54 have rated AAPL a Buy, while only two analysts rate the stock as a Hold. The average price target of $302.5 highlights an upside of over 16%, while Rosenblatt’s price target implies a modest increase of almost 3% as of March 10.

Source: Yahoo Finance

NB: Apple expects revenue to increase by 13% to 16%, compared with analysts' 10%??

An allergy to centralized computing

Based on Tweets by MilkRoadAI

The 3rd? most valuable company on Earth watched as its rivals lit $650 billion on fire and did nothing. The biggest cash bonfire in history, by far, eagerly fed by all the usual suspects but one.

It's either the dumbest or the most brilliant move in corporate history.

Apple used to be the biggest capex spender, mainly because it paid for most of the property plant and equipment in the factories that made its phones and computers. The so-called tooling or equipment spending plus its leased store renovations and some data centers were costs no other tech giants had and so Apple was an outlier. It was, as I wrote at the time, equivalent to buying a few aircraft carriers every year.

But that all changed with AI. Amazon is spending $200 billion this year on AI data centers. Google, $185 billion. Microsoft, $114 billion. Meta, $135 billion. Combined: $650 billion. [Not including OpenAI, Anthropic and SpaceX/XAI.] That is like buying the US Navy every year. And yet Apple's capital budget is still a modest $14 billion, oscillating with new hardware tooling cycles.

Apple is refusing to transfer its cash flow to Nvidia. Curiously, it believes that its cash flow belongs to its shareholders, not to Nvidia's.

The hyperscalers are now spending 94% of their operating cash flows on AI infrastructure. Amazon is projected to go negative free cash flow this year with as much as $28 billion in the red. Alphabet's free cash flow is expected to collapse 90% from $73 billion to $8 billion. These companies used to be the greatest cash machines ever built. Now they're borrowing money to keep the data center lights on.

The Big Five raised $121 billion in bonds in 2025 alone. Morgan Stanley projects $1.5 trillion in tech debt over the coming years. For the first time in history, hyperscalers hold more debt than cash. Perhaps this is why their P/E ratios slumped from mid thirties to mid twenties.

And what are they getting for that $650 billion? AI services generate roughly $35 billion in total revenue or 5% of what's being spent on infrastructure. There are dreams of more of course, but the business models of AI have yet to resonate, especially for consumers.

Now here is where Apple's bet becomes genius. AI models are commoditizing faster than anyone predicted. Software and hardware both have tendencies to commodify. Protections exist but they have to do with integration and distribution. DeepSeek built a model for $6 million that matches systems costing $100 million. Open source models now power 80% of startups seeking VC funding. The moat these companies are spending hundreds of billions to build is evaporating.

Apple understood this before anyone else. It didn't build its own AI model, it licensed Google's Gemini for about $1 billion a year. Why spend $100 billion building a factory when outsourcing costs a billion? And if a better model appears next year, Apple just switches vendors.

But Apple is not sitting still. It just dropped the M5 chip with a 16 core Neural Engine and Neural Accelerators built into every GPU core. It runs 70 billion parameter AI models locally, eventually even on your phone. The M5 delivers 4x the AI performance of the M4 and Apple doesn't need $200 billion in data centers.

Because Apple turned 2 billion devices into the data center.​ Every iPhone, Mac, iPad gets distributed AI at a scale no server farm can match. While its rivals burn cash, Apple is doing the opposite. $90.7 billion in stock buybacks last fiscal year.​ Its competitors? Combined buybacks collapsed 74% from their peak.​

Apple didn't miss the AI revolution. It just bet that the winners won't be the ones who build the infrastructure. They'll be the ones who own the customer and no one else on Earth owns the best customers.

Missed the AI angle

Wedbush analyst Dan Ives believes the launch lineup could help drive the next upgrade cycle for Apple, with the firm maintaining a $350 price target, implying roughly 33% upside from current levels.

According to Ives, the chips deliver over four times the peak GPU compute for AI compared with M4, alongside roughly 35% stronger graphics performance.

Apple paired the silicon with a refreshed Mac lineup, including new MacBook Air and MacBook Pro models, alongside a surprise entry: the MacBook Neo.

Ives believes the lineup could broaden the Mac base further, noting nearly half of Mac buyers remain new to the platform, leaving room for incremental growth.

Apple also introduced the iPhone 17e, powered by the A19 chip, designed to run generative AI models more efficiently.

For Ives, the takeaway is simple: Apple's expanding lineup of AI-enabled devices could set the stage for the next major hardware cycle — and potentially push the stock toward its $350 target.

Source: Sahm via Analyst: Dan Ives

NB: AI Silicon at the core…

Asymco Bulletin is a digest of all the work we have published for the week ending Mar 8, 2026.

Editor's Note

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Research

Apple Services in Europe: Scale and Growth

Since October 2023, Apple has been transparently reporting App Store user metrics across 27 EU nations, updating these figures biannually. This initiative spans a population over 450 million, offering a granular yet rounded down to the nearest million, potentially skewing figures slightly downward. To mitigate this undercounting bias, adjustments are factored into trend analyses.

Through three sampling intervals from 2023 through July 2024, a market landscape emerges. The aggregated data hints at subtle shifts and growth patterns. →

Stairway Update

The iPhone 17e emerges as an incremental refinement—"the new low end, same as the old low end, but better." Apple has streamlined its lineup by axing the mid-memory "e" model, leaving us with two price points. This simplification might appear reductive, yet it strategically consolidates offerings while enhancing value. Notably, the base model's memory has doubled, a move that defies the prevailing DRAM scarcity narrative, suggesting Apple's adept supply chain management and perhaps a bit of market leverage.

By trimming excess and boosting core features, the 17e exemplifies a nuanced approach to product evolution. →

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Nota Bene

Apple introduces iPhone 17e → Apple's iPhone 17e offers double storage at the same $599 price, boosting profit margins. →

Apple introduces the new iPad Air, powered by M4 → Apple's new iPad Air with M4 chip and increased memory boosts performance, enhancing versatility. →

Apple announces new MacBook Air with M5 and MacBook Pro with M5 Pro and M5 Max → Apple's latest MacBook lineup offers the affordable, efficient M5-powered Air, the mid-range balanced performer, and the high-end, powerhouse M5 Pro and Max models for demanding professionals. →

Apple unveils new Studio Display and all-new Studio Display XDR → Apple's Studio Display XDR boasts a 27-inch 5K Retina screen with mini-LED, 2000 nits brightness, and 120Hz refresh, ideal for professionals. →

Say hello to MacBook Neo → Apple launched the MacBook Neo, a budget-friendly laptop with premium features, priced at $599, amid concerns over shrinking margins in the Windows laptop market. →

Apple’s strategy is actually genius if you think about it → "Apple's strategic pivot to on-device AI could dismantle the AI boom by making models redundant and controlling the distribution gateway." →

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Office Hours

Apple Q&A: Horace Dediu & Ben Bajarin discuss implications of Apple’s March 4, 2026 rollout →

We convened our first Office Hours on March 4 to review Apple's latest releases, where we answered questions from a live audience of subscribers, and dissected Apple's latest and strategies. Topics covered:

• MacBook Neo's Market
• iPhone Pricing tiers
• Apple's Margin Strategy
• Siri and Apple's AI Strategy
• Spatial Computing: Ergonomics, AI
• Apple's AI and Spatial Computing
• Cellular Modems and Laptops
• Premium vs. "cheap"
• Changes to Smartphone Market Dynamics
• Product Cannibalization

Full recording and transcript is available to Asymco One subscribers.

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I did think about it. Three years ago.

the real bear case for this AI boom isn’t a bubble or a recession.

It’s your iPhone.

Baker says in 3 years, a bulked up iPhone will be able to run a pruned version of a frontier model.

Think future Gemini, Grok, ChatGPT at 30–60 tokens per second, on device, no cloud is needed and it’s free.

That’s exactly Apple’s strategy, don’t win the model war, become the distributor of AI.

Make it private, local and safe.

If that happens, most everyday AI use rewriting, summarizing, basic reasoning never touches a data center.

The AI capex boom gets cut off at the source.

Model builders become interchangeable and apple owns the gateway.

That’s the bear case Gavin is warning about.

The real threat to the AI boom isn’t that the models fail.

It’s that Apple makes them run on your phone and keeps all the power for itself.
The richest company on Earth just watched its rivals light $650 billion on fire.

And did nothing.

This might be the most brilliant move in corporate history.

Source: X (formerly Twitter)

NB: Apologies for linking to X. Edge computing is as old as the hills...

Personal AI

"OpenClaw [is] driving Mac lead times to multi-year highs." — Analyst Erik Woodring

As of Thursday, February 19th, lead times across most Mac products have quickly inflected to multi-year highs, around 2-4 weeks in the US (Exhibit 58), with lead times for Mac Studio the longest (27 days) followed by MacBook Pro M4 (23 days) and Mac Mini (19 days).

Source: Morgan Stanley via Apple 3.0

NB: It's not just the Mac Mini that is seeing a spike in sales...

Asymco Bulletin is a digest of all the work we have published for the week ending Feb 22, 2026.

Research

Teen Survey Update: What happens when teens grow up?

Latest data indicates 88% of teens own and intend to purchase iPhones, marking a decade-long trend of increasing adoption. This phenomenon transcends mere functionality; the iPhone has become a cultural icon, symbolizing status and identity.

Unlike other Apple products, such as Apple TV+ or Apple Music, which struggle for traction among teens, the iPhone's appeal is deeply woven into the social fabric, partly due to generational continuity—the children of early iPhone adopters are now loyal users themselves.

In contrast, social media platforms illustrate the fickle nature of tech usage among younger demographics. While Facebook remains prevalent among older millennials, Gen Z gravitates towards Instagram and TikTok, reflecting shifts in cultural preferences and digital behaviors.

For Apple, success in services like Music and TV+ hinges on leveraging existing family dynamics through bundling.

Read More →→→

Apple in Europe: How many iPhone switchers are addressable in the near term?

On the Q4 call, Tim Cook highlighted Greater China’s 38% year-over-year revenue growth, fueled by record iPhone sales, strong upgrade activity, and double-digit retail traffic gains.

Europe, however, drew little attention—despite generating more revenue for Apple than China. This is peculiar.

Europe’s smartphone market shows steady structural gains for iOS. Since 2018, share has risen from 24% to 39%, while Android has fallen from 74% to 60%—a 15-point swing equal to roughly 70 million additional users. With an installed base near 459 million users versus about 300 million in the U.S., Europe combines scale with affluence.

In sum, the pattern for Apple in Europe is not saturation but share transfer, signaling durable competitive strength in a mature market and an inkling of how all markets will eventually behave in maturity.

Read More →→→

Estimating 2035 iPhone Users

In the last quarter Apple reported 2.5 billion active devices. Of those, I estimate 1.6 billion are iPhones.

Using this as a base, I've created an iPhone installed base estimate looking forward to 2030, integrating Statcounter’s market share data, Ericsson’s global smartphone user forecasts, and BankMyCell’s smartphone install base.

The sources broadly align through 2025, though Statcounter’s historical iOS share (2017–2023) diverges somewhat, possibly reflecting Android’s heavier web traffic footprint due to usage patterns and bot activity rather.

Taken together, the data points to iPhone nearing 2 billion active devices by 2030, consistent with overall smartphone adoption. Android’s projected rise toward 4.5 billion users signals continuing headroom.

If switching dynamics and monetization trends persist, Apple’s ecosystem could expand to 2.5–3 billion users by 2035, with growth thereafter driven by switching and increased engagement depth and value extraction per user.

Read More →→→

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Nota Bene

Apple Announces Special Event in New York, London, and Shanghai on March 4 → Apple is hosting intimate, global "Special Apple Experience" events on March 4, 2026, likely unveiling new products like the iPhone 17e and M5-powered MacBooks, marking a fresh twist on traditional live-streamed launches.

Apple adds video experience to Apple Podcasts → The "pod" in podcasts originated from Apple's iPod, with the company popularizing the medium by integrating podcasting into iTunes in 2005, and continuing to innovate with features like video podcast support and dynamic ad insertion.

Why not maroon? The Macalope ponders the power of color → Apple's upcoming lineup, featuring color-excited anticipation for the iPhone 17e and modest updates to iPads, promises subtle yet intriguing tech advancements.

Dan Ives Says Apple’s AI Alone Could Be Worth $1.5 Trillion → Apple's unparalleled distribution through its vast user base offers a significant competitive edge for rapidly monetizing AI innovations, potentially adding $1.5 trillion in value.

While big tech burns cash on AI, Apple waits → As foundation models commoditize, Apple strategically curates top AI tech into its ecosystem, prioritizing user experience over engine development.

Secure the chips, absorb the costs, and grab more market share → Apple faces memory cost inflation potentially raising iPhone prices, yet its strong ecosystem and execution provide resilience, whereas competitors like Samsung may struggle more due to lesser volume leverage.

iPhone Emergency SOS via Satellite Helped Six Skiers Survive Tahoe Avalanche → Six skiers survived a deadly Lake Tahoe avalanche by using iPhone's Emergency SOS via satellite, highlighting its transition from luxury to essential. This feature enabled crucial communication with rescuers in remote areas lacking cellular service. The evolution mirrors mobile phones but faces slower adoption due to satellite bandwidth constraints.

The US Supreme Court has ruled against US President Donald Trump’s decision to impose a raft of global tariffs → Apple and other affected companies may soon seek refunds for tariffs paid, following the Supreme Court's decision to invalidate Trump's tariffs, though the exact timeline and amount remain uncertain.

Bankers complain that Apple has a tight grip on mobile payments → Canadian banks struggled to compete in the mobile wallet market, dominated by tech giants like Apple and Google, due to their risk-averse nature clashing with tech's innovation-driven approach.

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Bonfire of the Tech Vanities

But consider an alternative reading. The foundation model market is beginning to exhibit classic signs of commoditisation. When one company introduces agentic capabilities, the others follow within months. Benchmark leadership changes constantly, with no provider establishing a durable lead. Prices are collapsing: Anthropic recently cut prices by 67%, Google has slashed rates by 70%-80%, and OpenAI has repeatedly reduced costs on successive models. This is textbook commodity market behaviour.

If foundation models are heading toward commodity status, then the strategic value shifts to whoever controls the integration layer and the user relationship. Apple has 2.4 billion active devices. It has the most valuable distribution channel in technology. And its recent moves suggest a deliberate strategy: rather than building frontier models, source them from whoever is best at any given moment.

This is precisely what Apple has done. It partnered with OpenAI in 2024, then switched to Google’s Gemini to power the next generation of Siri. The company is not building the engine; it is curating the best available engine at any given moment, wrapping it in Apple’s privacy architecture, and integrating it across the ecosystem. Own the experience, outsource the commodity.

Source: stocks.apple.com

What's the value of distribution?

Dan Ives Says Apple's AI Alone Could Be Worth $1.5 Trillion — And Almost No One Is Pricing It In  Benzinga

Apple's Biggest AI Advantage Is Its Installed Base
Unlike most AI companies still searching for users, Apple already has them — more than 2.5 billion active devices and over 1.5 billion iPhones worldwide. That gives Apple an unmatched distribution engine to roll out AI-powered services instantly across its ecosystem.

Ives expects Apple's long-awaited Siri overhaul and broader AI platform to begin rolling out in phases starting this summer, with more advanced capabilities arriving into 2026. The real opportunity isn't just smarter devices — it's monetization.

Apple could introduce AI-driven subscription services, embedding recurring, high-margin software revenue into its ecosystem — a shift that would move Apple deeper into SaaS-like economics.

Source: Benzinga

NB: Modeling AI opportunities is an evolving problem. First we have the problem of costs which are changing rapidly and then there is adoption which is changing even faster. Revenues and cash flows are harder still as the business models are unclear. The products themselves are not necessarily stable and jobs-to-be-done questions abound.

 

 

Apple's cost pressures are real, but the growth story is bigger

Apple’s latest Wall Street price targets

Wedbush:$350 (outperform).
Goldman Sachs:$330 (buy).
JPMorgan:$325 (overweight).
BofA Securities:$325 (buy).
Morgan Stanley:$315 (overweight).
Sources: Yahoo Finance, Investing.com

Despite memory cost inflation being a big deal, it still doesn't fundamentally impact Apple’s tremendous earnings power, Bernstein’s Mark Newman shared in a CNBC interview.

That’s not to say he doesn’t expect iPhone production costs to rise, though.

Heightened component costs could push iPhone prices up by as much as 15%, Newman added, while bumping the overall average selling price by nearly 12% as some customers trade down to cheaper models.

That increase is substantial, and it comes down to a staggering 237% surge in mobile DRAM contract prices since Q2 2025, along with a 70% jump in NAND.

Despite the pressures, Newman feels that Apple separates itself from the pack through its superb execution.

He says Apple is “managing better than competition,” led by unmatched scale advantages, supplier leverage, product mix, and durable pricing power.

To his point, Apple has evolved into a powerful platform company with a walled-garden ecosystem that locks users in.

That matters a ton when costs spike.

That’s why even with the memory pressures in play, Bernstein’s modeling points to iPhone gross margins dropping by nearly 1.5 percentage points by Q4 2027.

Though that’s meaningful, Newman believes the EPS impact will be substantially offset by higher-margin services revenue, mix shift, and aggressive cost management.

Apple’s AI ambitions outweigh rising costs

Newman’s bullish take on Apple centers around AI.

Instead of AI technology showing up just as a chatbot, Newman says Apple is deploying it as a system-level layer, making its ecosystem stickier.

What makes this possible is a hybrid design that handles as many requests on the device and reroutes the heavier ones (advanced reasoning) through Private Cloud Compute using Google’s Gemini.

That robust setup ensures Apple’s privacy positioning remains firmly intact, while delivering cutting-edge responses and features.

Unlike many of its peers, Apple isn’t in the race to win AI benchmarks or translate those gains into tangible financial gains. It just needs those features to change behavior and pave the way for healthier services revenue.

In fact, some of the earlier modeling supports that logic.

Morgan Stanley’s April 2025 survey, as reported by Investing.com, was an early “tell” that Apple’s AI pitch would likely move the needle.

At the time, 51% of iPhone owners said they were “extremely likely” to upgrade in the next 12 months. More importantly, those respondents, compared with those in the previous fall, showed a 12% higher willingness to pay $9.11 per month for Apple Intelligence.

For perspective, the significant Siri 2.0 (the next phase of Apple Intelligence) is reportedly set to launch in spring 2026, according to Mac Rumors.

Ironically, Apple stock was initially blasted for lagging in the AI realm. However, as we’ve gotten deeper into the cycle, Newman argues that investors have actually felt a lot “more comfortable” amid the AI wars.

Source: TheStreet

NB: A 237% surge in mobile DRAM contract prices since Q2 2025 is spot pricing. Apple does not buy on the current market but what is effectively on a futures market. It would behoove the reader to calculate the quantity of orders for e.g. SoC and Memory Apple places vs. hyperscalers. If "51% of iPhone owners said they were “extremely likely” to upgrade in the next 12 months" that's 850 million people worldwide.