Apple Intelligence today is like seeing the first iPhone back in 2007. You know great things are coming.

By Cody Willard

If you had judged the iPhone based on the original product, you would have missed the entire vision

For most of the past 18 months, people have been wondering what Apple's (AAPL) AI strategy would be. After the "ChatGPT Moment" in November 2022 and Nvidia's (NVDA) meteoric rise, a lot of folks were holding their breath while waiting to see what Apple could do in AI. Everyone could see that Apple had a lot of AI potential, but no one knew for sure what exactly Apple AI would look like.

Monday's unveiling of Apple Intelligence has thus far seen mixed reviews. I tend to agree that there wasn't anything too fantastic or exceptionally revolutionary in yesterday's announcement, but that is a shortsighted way of looking at Apple Intelligence. Apple revealed a Siri refresh that will be able to take more actions within both Apple and non-Apple apps, and have a better understanding of context.

Apple's intelligent future

It's worth a trip down memory lane to help us understand where we are in the Apple Intelligence timeline. Do you remember what the original iPhone was like? Apple introduced the first iPhone at MacWorld in 2007. Let's compare the original iPhone to today's top-of-the-line iPhone, the iPhone 15 Pro Max.

The original iPhone had a screen that was about half the size of the iPhone 15 Pro Max, 97% less camera quality, 99% less available memory, 68% less battery life, 95% fewer transistors on its chips, and 99.999% fewer available apps.

Obviously, if you had made a judgment about what the iPhone ultimately would become based on the original product, you would have missed the entire vision.

Today, the iPhone is probably the best-selling consumer product in history. It has permeated every facet of our personal and professional lives. Even though we did not know back in 2007 exactly all of the amazing things that the iPhone would become, to some (including the visionary Steve Jobs), we could see that having a "MiniMacBookPlus in your pocket" (as I used to say) would be revolutionary and make people incredibly more productive, connected, creative, and safer by several orders of magnitude.

Being able to see that vision early obviously paid off well for investors.

With Apple Intelligence, we are at the original iPhone-stage of the product lifecycle.

With Apple Intelligence, we are at the original-iPhone stage of the product lifecycle. Apple Intelligence, with its now "smart" iPad calculator and notes that can help you solve a complex handwritten math problem, is not really anything that will propel Apple Intelligence to be a multi-trillion dollar kicker for Apple.

But I am confident that, like the iPhone, Apple Intelligence will ultimately end up permeating every facet of our personal and professional lives. Apple Intelligence will be built into all of Apple's existing form factors (iPhone, iPad, Mac) and those yet to come (including significantly improved versions of the Vision Pro or some other AR/VR/XR headset).

The ability to talk to a computer, to let it see what you see, and to let it hear what you hear will be extremely powerful for everyday consumers. And like with the original iPhone, there are basically no apps - yet - that are built for and with Apple Intelligence. But I am confident that there will be thousands of incredible AI-enabled services and apps that will make Apple Intelligence much more valuable to consumers.

But how long will it take before Apple Intelligence enables trillions of dollars of new wealth? It took probably five or seven years after launch before the iPhone reached a critical mass of users and applications. It has taken another 17 years for Apple to turn that revolutionary new product into an extra $2.5 trillion in market cap.

This time, I expect the wealth creation and transformation of the company will go much faster given the Kurzweilian Rate of Exponential Technological Change that I often write about. For example, the Apple and App Store ecosystem is significantly larger today than it was in 2007, and that means Apple Intelligence will be able to scale much more quickly and seamlessly than the original iPhone/iOS did. Within three to five years we will see some amazing things from Apple Intelligence that will boost Apple's bottom line pretty quickly.

My fund has owned Apple stock for almost 20 years now and we plan on sticking with this great winner. I'm not chasing the stock now as it is putting in all-time highs, but of course, would be looking to pick up a little the next time it pulls back 10%-15%. I tell people that if you don't own stock in one of our "forever positions" like Apple, pick up about a third of the position that you want to ultimately have and give yourself room to buy more stock on pullbacks.

Cody Willard is chief investment officer at 10,000 Days Capital Management and the publisher of TradingWithCody.com, a subscription trading newsletter offering real-time trade alerts.

Disclosure: Willard and/or 10,000 Days Fund LP were net long AAPL and NVDA at the time of publication. Positions can change at any time and without notice.

More: 'Bye Alexa': Apple Intelligence could make Siri the best AI assistant of all

Also read: What investors may be getting wrong about Apple's AI strategy

-Cody Willard

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-11-24 1459ET

Copyright (c) 2024 Dow Jones & Company, Inc.