CNBC’s Steve Kovach joins 'The Exchange' to discuss Apple's AI strategy as the 'Big Tech' name is set to report earnings next week.

Cupertino

Apple is preparing to release its earnings report, drawing significant attention from investors due to ongoing concerns about its artificial intelligence strategy and the effects of tariffs. The company's stock has underperformed compared to other major technology firms, with only Tesla faring worse among the so-called 'mag seven.'

Key issues include the potential impact of upcoming iPhone launches, possible price increases to offset tariffs, and questions about Apple's ability to retain and attract top AI talent following recent departures to competitors like Meta. Uncertainty remains over the long-term effects of tariffs and supply chain adjustments, as well as whether Apple will pursue acquisitions or major hiring initiatives to strengthen its AI capabilities.

Key questions for Apple ahead of earnings

Four of the mag seven report next week, Microsoft, Meta, Amazon and Apple. And the stakes are high for Apple in particular, as investors look for signs of a clearer AI strategy. Steve Kovac has more in tech check, although I can't imagine they would use earnings, Steve, to give us that insight. Not necessarily, but I am going to tell you something they will get could get some insight on. So Apple earnings there are on Thursday and could be the catalyst for that second worst performing mag seven stock of the year, which is down nearly 15 percent year to date. Only Tesla is doing worse. The company has two major headwinds thanks to tariffs and its failure to deliver an AI, like you just mentioned, not to mention losing top talent in Mark Zuckerberg's poaching spree this summer. Now, I'm going to be paying attention, Kelly, to guidance and what that tells us about the next crop of iPhones expected to launch in the last few weeks of the quarter. Guidance is going to reflect that big launch. So if that number comes in spicy, let's say high single digit percentage revenue growth. You can look at it two ways. First, Apple may be increasing iPhone prices in part to mitigate tariffs, but also because the base model has been the same price since twenty nineteen. It could also be a signal. Apple thinks it has a new hit coming. That so-called iPhone air, the rumored super slim design for that next iPhone 17 and that tracks with historical bumps in iPhone sales. Forget about Apple intelligence, which failed to spur the super cycle on iPhone sales. The bulls predicted was going to happen last year. Instead, it's fresh designs that get folks excited to upgrade. You can see that in twenty fourteen when Apple added bigger screens or in twenty twenty when it added five G along with a fresh new design still in use today, by the way. So while Apple works on its mulligan getting series A. I update correct. Pay attention to what's happening with iPhone hardware more than anything in the back half of the year, Kelly. Yeah, I mean, we say like this one is super important and all of that. And in some ways the bar is high, but in some ways the bar is very low, right? There is a lot of negativity around the name right now. A ton. And some of that's out of Apple's control, namely tariffs. And by the way, they're reporting earnings the day before August one that that new deadline. So I mean, it's anyone's guess, including Tim Cook's. What august 1st is going to look like what the tariff picture is going to look like. But I'll tell you on that last earnings call, Kelly, that's all analysts wanted to know beyond the june quarter, that $900 million hit Apple said to expect from tariffs. What does it look like in the september and december quarters? I don't think even they accurately predict that far out given how everything keeps moving back and forth. Not just that, but the whole question of moving the supply chain to India, right? Maybe to the U. S. I mean, these are, these are decade questions, decade long issues to decide. This is not something that's they're really gonna have a lot of clarity and I wouldn't think quarter to quarter. Exactly. And I will also just know, remember, there's those threatened tariffs in june that trump said, if you know, if you don't build stuff here, I'm gonna, by the end of june, smartphones are getting a tariff that never materialized. So you've got to play the taco game a little bit too with what's going on with tariffs as well. So it's, it's going to be confusing. Investors want clarity and it's just, we're going to see if apple can provide anything else. But from what they're hearing on that tariff front, should we expect at any point that they suddenly go on some kind of hiring spree or the acquisition? That's going to be a huge question. Yeah. Do we acquire away? I know our friend Jim Kramer loves to talk about buying perplexity or do they need to be spending enormous amounts of money on talent? They've lost some key players in their A. I division to meta and that's poaching spree that Zuckerberg has gone on. Do they need to counter that? Do they need to go on their own poaching spree so to speak? Or if if they don't give any indication of that, maybe they're happy with the team they have in place and think they can finally execute the second time around with this big Siri update they say is going to come next year. Right. Or they're just being patient and waiting it out. See what happens. Waiting for the next move. Steve. Thanks.

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Glasgow

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Ukraine Invasion

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Breakdown