Apple Risks Falling Behind In AI Arms Race, Says Wedbush's Dan Ives: 'Biggest Strategic Mistake' Was Not Buying Netflix

Tech giant Apple Inc. (NASDAQ:AAPL) may be in danger of losing ground in the artificial intelligence race, according to Wedbush Securities analyst Dan Ives, who warned the company's lack of bold moves is creating risks as rivals accelerate.

Falling Behind In The AI Arms Race

Ives said Apple has focused too heavily on incremental iPhone changes while other tech leaders pour resources into artificial intelligence, while speaking on The Real Eisman Playbook podcast, with host Steve Eisman.

He likened Apple to a toll collector, he said, “It's pay to play with Apple. You gotta pay a toll on the highway and that's Apple,” but warned that simply collecting fees through its app ecosystem, even with its unmatched base of roughly 1.5 billion iPhones worldwide, won't be enough in the long run.

He added that the stock could still reach $270–$280 based on its current trajectory, from its closing price of $254.43 on Monday, but for the company to truly outperform, it needs to integrate proprietary AI models directly into its devices. “You need them to have true models built into their phones that are proprietary,” Ives said.

Waning Culture And M&A Strategy

Ives also criticized the company's culture and M&A strategy, calling its internal innovation “lackluster” and arguing that “the biggest strategic mistake they ever made” was not acquiring streaming giant Netflix Inc. (NASDAQ:NFLX), adding that the company “underestimated content,” just as it underestimated the need for its own AI buildout.

According to Ives, the company is now struggling to retain talent, with top developers flocking to OpenAI and Palantir Technologies Inc. (NASDAQ:PLTR).

Thus, Ives concludes that there is little hope for “anything happening internally at Apple,” hinting that innovation can only come from acquisitions.

iPhone 17 Sees Strong Momentum

Despite concerns surrounding Apple’s challenges in AI, the iPhone 17 is reporting strong momentum, especially in markets such as China and India.

Citing strong early demand for the iPhone 17 lineup, Ives had raised his target for the stock to $310, saying that he was “positively surprised on the demand trajectory.” Analysts also see a rebound in the company’s market share in China, where it has been under pressure from local rivals Huawei Technologies and Xiaomi.

Apple shares were down 0.40% on Monday, closing at $254.43, and are down another 0.38% overnight. The stock scores poorly in Benzinga’s Edge Stock Rankings, but has a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.

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