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 barely moved as investors look for clearer evidence that artificial intelligence will meaningfully drive future growth, according to Deepwater Asset Management's Gene Munster.

Apple Delivers Strong Quarter — On Paper

Apple reported fiscal first-quarter revenue of $143.76 billion, topping Wall Street expectations of $138.42 billion, while earnings came in at $2.84 per share, ahead of estimates of $2.66, according to Benzinga Pro.

Revenue rose 16% year over year and earnings climbed 19%.

The company also issued stronger-than-expected guidance, forecasting March-quarter revenue growth of 13% to 16% and gross margins of 48% to 49%. Apple shares, however, gained less than 1% in after-hours trading.

Gene Munster: Investors Want Proof Of AI Impact

Munster said the muted stock reaction reflects investor skepticism around Apple's AI strategy, not dissatisfaction with its financial performance.

"I think it's as simple as investors want to hear more about how AI is going to have a meaningful impact on their business," Munster said in a post-earnings commentary.

He noted that Apple's results show customers are satisfied and continue upgrading devices, but investors remain unconvinced without clearer AI milestones or timelines.

Apple Intelligence Set Expectations — Then Fell Quiet

Munster traced the issue back to Apple's unveiling of Apple Intelligence in mid-2024, which raised expectations that AI would reaccelerate growth.

He said the company later underdelivered on those expectations, creating a credibility gap.

"That misstep was un-Apple-like," Munster said, adding that Apple has since shifted to a talk less, show later approach under CEO Tim Cook.

During the earnings call, Cook offered limited updates on AI, saying only that a revamped Siri powered by Apple Intelligence would arrive "this year," without additional detail.

Customers Are Happy, Investors Remain Skeptical

Munster highlighted a sharp rebound in China revenue, up 38% year over year, along with continued growth in Apple's installed base, now exceeding 2.5 billion active devices.

Customers don't feel like they "need AI today," Munster said. "But investors are yearning for more details."

Until Apple provides more substance around AI features, timing and monetization, Munster said, investors are likely to remain in a wait-and-see mode — even as the company posts strong financial results.

Apple stock scores low on Value in Benzinga's Edge Stock Rankings, with a favorable price trend in the long term but negative in the short and medium term.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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