A core holding for millions of investors all over the globe, Apple (AAPL) could be facing its AI (artificial intelligence) make or break in 2026.
Depending on your view, the $3.82tn tech giant has either been left in the slipstream of rivals in the scramble to build Large Language Models (LLMs) to provide AI infrastructure, or it has opted out of the race.
However, Apple facing its AI make or break in 2026 could redefine its future trajectory in the tech industry.
As Wedbush’s respected tech analyst Dan Ives noted, Apple stock has ‘languished so far this year’.
Investors have expressed concern this will be another ‘waiting game year’ for Apple to monetise and capitalise on this ‘4th Industrial Revolution.’
Apple stock lagged in 2025
Apple stock is down around 4% so far in 2026, but more importantly it massively underperformed through 2025.
The stock posted total returns (share price gains plus dividends) of 9% last year, well below the 17.9% chalked up by the S&P 500.
It’s also way behind other ‘Magnificant Seven’ stocks like Nvidia (NVDA), and Alphabet (GOOG) which rallied 37% and 62% respectively last year.
As Fundsmith Equity’s Terry Smith noted in his latest annual letter to shareholders, maybe CEO Tim Cook is working on the adage; ‘you don’t have to own a cow to sell milk.’
Smith noted: ‘Apple has its devices and about a billion mostly high-end consumers locked into them and increasingly into its services. It seems unlikely that there will be a shortage of LLMs that the hyperscalers will want to offer Apple for iPhone users.’
Make or break in 2026
Which brings us back to Wedbush’ analyst Ives. He thinks 2026 will be ‘a monumental year’ for Apple, arguing the market is underestimating the scale and timing of its push into AI. Apple’s anticipated steps in AI, facing its AI make or break in 2026, are carefully watched by analysts.
The analyst is predicting 2026 will be the year that Apple dives into the deep end of the pool on its AI strategic roadmap. A ‘prove me year’ for the tech giant.
‘Successful execution could add roughly $100 per share’, Ives calculates, which would push the stock to $350 or more.
Twinning with Google’s Gemini
Apple’s strategic partnership with Google Gemini will be crucial, an exclusive partner underpinning Apple’s AI strategy.
The tech giants announced a ‘multi-year collaboration’ on 12 Jan which will see the iPhone-maker base some of its key tech on Google’s Gemini AI models.
‘After careful evaluation, Apple determined that Google’s Al technology provides the most capable foundation for Apple Foundation Models. It is excited about the innovative new experiences it will unlock for Apple users’, the tech giants announced in a joint statement. Enthusiasm is high as Apple is facing its AI make or break in 2026.
But Ives sees other important levers for Apple to pull this year such as the success of its iPhone 17 and iPhone 18.
Ives estimates iPhone unit sales in 2026 can ‘handily exceed current Street estimates’.
He cites strength in China, rising average selling prices (ASPs), and the potential introduction of a foldable phone during the iPhone 18 cycle. Ives expects ASPs on Pro models to rise by roughly $100.
Cook and Apple to prolong partnership
Lastly, Ives dismisses speculation around a near-term leadership change, saying Tim Cook is likely to remain CEO through at least 2027. A period Apple views as ‘integral’ for designing and executing Apple’s broader AI strategy.
“Apple is finally looking to go on the offensive by bringing more AI talent (expect more tech adds) to the AAPL ecosystem. This will further bolster Apple Intelligence capabilities including the key outside hire of renowned AI researcher Amar Subramanya,” he added. This aligns with Apple facing its AI make or break in 2026.
Whether Ives or Smith’s views are on the money, time will tell, but investors are clearly craving a more coherent AI strategy from Apple.
Its tie-up with Alphabet and Google Gemini appears to be a good start, albeit one which represents a stark departure for Apple, which previously insisted on owning every layer of its technology stack.
Either way, pressure will mount on Apple to be more proactive with its vast cash flows.
The Cupertino tech giant reported a net cash pile of around $34 billion in its Q4 results to September 2025, and record operating cash flow of $29.7 billion for that quarter.
Investors would love to see a new product line spring from a powerful cash engine, but that’s proved tough going over many years.
The obvious alternative for Apple, which is increasingly a high quality but modest growth stock, is to significantly hike its cash returns to shareholders through higher dividends and share buybacks.
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