---
title: "Siri AI's lack of brilliance has led to Apple's pullback. Is it a crisis of patience or an unjustified sell-off?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/290153848.md"
description: "Apple WWDC26 announced the availability of Siri AI and a buyback plan worth hundreds of billions, but the stock price fell 8% due to the market's impatience with the product launch timeline. Analysts believe this sell-off is unreasonable, as Apple is at a turning point, with a forward price-to-earnings ratio premium of only 0.71%, indicating that the valuation is not overly high. The current decline may provide investors with a discounted entry opportunity"
datetime: "2026-06-18T07:02:13.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/290153848.md)
  - [en](https://longbridge.com/en/news/290153848.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/290153848.md)
---

# Siri AI's lack of brilliance has led to Apple's pullback. Is it a crisis of patience or an unjustified sell-off?

According to Zhitong Finance APP, there are two reasons for the stock price decline: one is due to internal issues within the company, and the other is that investors have lost patience. The decline in Apple Inc.'s (AAPL.US) stock price is a good example of the latter. Last week, Apple's stock price reached a 52-week high of about $315 before the WWDC26 keynote, following the release of a finally usable AI Siri, the approval of a $100 billion stock buyback plan, and an expected revenue growth of 14% to 17%—all happening within the same week. However, the stock price subsequently fell by 8%. This is not a warning signal, but rather the market offering a turning point to investors at a discounted price, and this wave of selling is also unreasonable.

What triggered the sell-off? In short, Apple finally showcased a truly functional Siri, which is what investors have been hoping for over the past two years. That said, no one has told us when users will actually be able to use it. This is the story behind the sell-off after the keynote. The market was not scared off by the product itself, but rather grew impatient about its market launch. To be fair, investors have reason to feel impatient at this time, but this is still a relatively simple reason for selling, far less significant than the product failing to meet expectations.

**Where does Apple stand currently?**

As of Wednesday, Apple's stock closed at about $296. Since the beginning of the year, the stock has risen about 10%, with a cumulative increase of over 50% in the past 12 months. The stock price drop after the developer conference is shocking, but based on Apple's historical experience, it is often followed by a period of calm.

So, is Apple's stock still overvalued? Because this stock has long been considered overvalued. Currently, its forward price-to-earnings ratio is 34.17 times, which means the stock is trading at a 2.53% premium compared to its peers.

![e8cd8a1554bc6e479baea12c3765abf.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260618/1781764434297994.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

First, this metric shows the ratio of the stock price to the company's expected earnings for next year, which can quickly assess whether the stock's current valuation is too high. Compared to the industry median, a 0.71% premium is far from reaching the "overvalued" level, which is actually quite rare for a company of Apple's caliber. Companies of this size typically enjoy a significant premium over their peers, so the potential undervaluation is definitely worth noting.

![7bfa2686a348728d2e9165670dd2f90.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260618/1781764473642289.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Based on the past 12 months' performance, Apple's price-to-earnings ratio is 36.28 times, just below the industry median. Unlike the expected price-to-earnings ratio, this metric is based on Apple's earnings from the past year. Among these two metrics, this one is of slightly lower importance, but even so, it still indicates that Apple may be undervalued compared to other companies in the same industry Apple's PEG ratio is currently 1.26, slightly above the reasonable value of 1.0.

![2a0b0243e50c1d36cd0ddd5841f5521.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260618/1781764489375403.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

This is where the notion of "Apple's stock price being expensive" falls apart. For years, Apple's stock price has indeed been outrageously high, and historically, the premium on Apple has been due to its closed ecosystem and substantial cash reserves. However, interestingly, investors are no longer willing to pay this premium.

In fact, it may even be possible to buy at a price slightly below the average of large tech companies while still obtaining one of the most stable streams of income in the market. Even better, this potential undervaluation coincides with Apple addressing a significant question that has plagued it for years—whether Siri is truly effective and can compete with other artificial intelligences. Generally speaking, consumers prefer to pay a reasonable price for an increasingly better product rather than a low price for an increasingly worse one, and Apple clearly falls into the former category.

**What factors could drive the stock price up?**

Apple has rebuilt Siri based on a customized version of Alphabet's (GOOGL.US) Gemini model, reportedly paying Alphabet about $1 billion annually for this. Following this update, Siri has been renamed Siri AI, and the model runs on Apple's own data centers. There is a widespread belief that Apple is waving the white flag, as the company that once vowed to develop artificial intelligence on its own terms is now renting the "brain" of a computer.

That said, analysts point out that this reaction is completely unfounded—the reason being cost. Apple's biggest competitors invest hundreds of billions annually in developing their own artificial intelligence, but no one really knows what returns they will ultimately gain from it. Will artificial intelligence eventually bring profits to Apple? For some companies, the outlook is clear, but for Apple, no one can be certain—hence it does not dare to take risks.

Instead, Apple is simply paying to use Google's Gemini to keep pace in the field of artificial intelligence, and Gemini remains one of the best AI models available. The key is that Gemini powers Siri AI, which could significantly enhance Siri's future capabilities, but the annual cost of about $1 billion is negligible compared to Apple's quarterly revenue.

Moreover, Apple has stated that this agreement only applies to the current product cycle, which includes this generation of iPhones and their software. Therefore, once Apple's self-developed artificial intelligence is strong enough to compete with Alphabet, it can quietly replace Gemini and integrate its own system behind Siri, with users hardly noticing the change. This way, Apple can eventually detach from Alphabet while retaining the customers and usage habits accumulated during the agreement's effectiveness So, why is this update worth paying attention to? The key lies in its coverage—this has always been Apple's advantage and something that artificial intelligence labs cannot replicate. This update will cover over 2.5 billion active devices that users already own. Notably, OpenAI has struggled to reach a weekly user count of 900 million, while Apple already has a large loyal user base that not only has credit cards linked but has also developed usage habits.

There is no expectation that the new Siri AI will replace leading AI models overnight, but from a business perspective, a "good enough" Siri AI installed on 2.5 billion devices can easily outperform an excellent AI that still needs to persuade users to download an app one by one.

So, what is the potential impact of Siri AI on Apple's financial situation? In fact, artificial intelligence is almost fully integrated into Apple's services business. This is because a smarter Siri will give users more "small" reasons to use Apple's paid services. For example, users might click "yes" to make a purchase in the App Store or ultimately feel that the value of iCloud exceeds the monthly fee. I don't think artificial intelligence will become a standalone financial project; however, it does help enhance Apple's existing financial performance.

Therefore, it is still too early to accurately estimate the potential revenue that Siri AI might bring, as management has not provided a release date or revealed any plans on how to profit from it—more details will be discussed in the next section. More importantly, is the direction of development. A more powerful version of Siri is on the way and will land on a vast array of devices, supporting Apple's most profitable business, which is enough to be optimistic about Apple's growth prospects.

**What are the risks?**

Every stock's potential growth driver has its weaknesses, and the latest disclosure from Apple is that Siri AI will not be launched in the European Union and mainland China—Apple's reason given is local regulatory restrictions. This has a significant impact because, according to an industry report, these two markets accounted for about 35% of Apple's iPhone shipments over the past year, with the European market alone accounting for nearly 27% of Apple's sales in the last fiscal year.

Therefore, about one-third of Apple's phone sales are in regions where the new Siri AI cannot be used. This could pose a problem, as Siri AI is currently one of the main reasons that attract users to Apple, but one-third of Apple users cannot access this feature, and it is uncertain when they will be able to. Rather than a temporary wait, it feels more like a stalemate, as reports indicate that Apple had applied for an exemption from the EU's Digital Markets Act for at least 18 months but was denied, and the EU has not provided a new timeline.

The Digital Markets Act is the EU's legal framework that constrains large tech companies. The situation in China is even more complex, as product approvals require local partners and are subject to laws that Apple cannot control. One point is more concerning than the delay itself, as delays at least have an endpoint, allowing management to plan accordingly, while regulatory restrictions have no time limit **Management Guidance**

The performance guidance for the third quarter of fiscal year 2026 (the quarter ending June 2026) expects revenue to grow by 14% to 17% year-over-year, which is quite good for a company like Apple. However, what really caught attention was the warning regarding gross margins. Chief Financial Officer Kevin Parker pointed out that the costs of memory and other components are rising rapidly, and even Tim Cook stated that these costs will be higher in the June quarter. Regarding the gross margin of the services business, the CFO's exact words were: "Therefore, at any given point in time, the relative performance of these businesses will affect the gross margin. This time, we are particularly focused on the gross margin of the services sector in the second quarter, which we previously mentioned increased by 20 basis points quarter-over-quarter."

The reason for this situation is the global shortage of memory chips, which is driven by a surge in demand due to the construction of artificial intelligence infrastructure. Cook stated on the conference call that the fundamental reason for the iPhone supply shortage is the insufficient supply of the latest chips, as chip suppliers are allocating some of their capacity to produce AI chips. As a result, demand exceeds supply, causing Apple to lose some profits.

This wave driving the growth of many tech companies, including Apple, has also pushed up the prices of memory chips required for Apple devices, directly impacting Apple's profits, as each additional chip cost reduces profit margins. The good news is that this situation will not last forever. As memory suppliers like Micron Technology (MU.US) increase production capacity, this pressure should ease on its own.

There are a few other noteworthy points from this conference call. The team pointed out in advance that the iPad will face significant challenges this year compared to last year's strong start, and the overall outlook depends on whether current trade and tariff rules remain unchanged.

Additionally, on a positive note, the board approved a $100 billion stock buyback plan and raised the dividend by 4% to $0.27 per share.

**So, how is the leadership transition proceeding?**

All of this is accompanied by a leadership change, and timing is crucial. The recent WWDC developer conference was Tim Cook's last as CEO. He will transition to Executive Chairman on September 1, 2026, handing over the CEO position to current hardware engineering head John Ternus. Ternus's first keynote as CEO will take place at the iPhone launch event in September, meaning the release of the iPhone 18 will occur under the leadership of Apple's new CEO.

From an optimistic perspective, Cook is leaving at a peak time, with the company achieving record quarterly performance and its AI plans finally coming to fruition after two years of challenging times. Appointing a hardware expert to the top position suggests a return to bold product innovation.

That said, some are concerned that Tim Cook's nearly perfect 15-year tenure is now handing over the "baton" amid the simultaneous emergence of AI promotion and issues in Europe and China. The biggest risk during Tim Cook's tenure is that people may remember his failure in AI promotion in 2024, along with that Siri who never would help me turn on the lights Launching a fully functional assistant before the transition period may help address these shortcomings.

It is worth noting how Turner will address the two unresolved issues left by Cook—the release date of Siri AI and the stalemate with Europe and possibly China. How the new CEO handles these issues in the first few months will be more telling than any keynote presentation.

**Is it still worth buying Apple now?**

As of now, Apple has performed quite well in responding to recent challenges. It has found a low-cost way to enter the artificial intelligence field—leveraging an unparalleled advantage: billions of devices already in people's hands. Moreover, its leadership transition was completed under strong circumstances rather than in haste.

Of course, risks cannot be ignored, but the price investors are being asked to pay today does not align with that of a company lagging behind the times. Given this, along with all the aforementioned factors, analysts maintain their "buy" rating on Apple

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