Investors get more reasons to like Apple after scrapping EV plans, AI update

Apple reportedly canceled its decade-long electric self-driving car project and CEO Tim Cook talked about the iPhone maker’s artificial intelligence vision, giving investors more reasons to be bullish on its stock . The tech giant announced internally on Tuesday the end of its self-driving electric vehicle development program, Bloomberg News reported, citing people familiar with the matter. Bloomberg said that many employees in the nearly 2,000-person team will be assigned to work in Apple’s artificial intelligence department. A day later, at Apple’s virtual shareholder meeting, Cook said the tech giant sees “incredible breakthrough potential in generative artificial intelligence, which is why we are making significant investments in this area right now.” Cook’s comments are noteworthy because since launching ChatGPT in late 2022 and pushing generative artificial intelligence into the mainstream, Apple has generally lagged behind its big tech peers in its public embrace of the popular technology. Apple shares are down about 6% so far this year, including a 0.75% drop on Wednesday. Meanwhile, the S&P 500 is up 6% in 2024. Despite the differences, Jim Cramer reiterated his long-standing view on the stock. “The reason it’s so difficult to own Apple and not trade it is because during periods of poor performance, everyone questions the wisdom of owning the stock,” Jim said during Wednesday’s morning conference call. “In fact,” Jim added. They decided not to buy the car, well, thank God.” He cited challenges and controversies facing existing self-driving car projects, such as General Motors Co.’s Cruise and Club Holding’s Waymo Alphabet. Sales of human-driven electric vehicles are also growing less than expected as the industry struggles to achieve mainstream adoption despite heavy investments in recent years by legacy automakers such as Club-controlled Ford Motor Co. and General Motors Co. Both companies have increased their focus on hybrids. Overall, the EV market is saturated, although Tesla remains the dominant player in the United States. There is little public information about Apple’s self-driving car ambitions, but reports first surfaced in 2014 that the company poached automotive engineers from other companies. The iPhone maker’s path to commercializing its electric vehicle ambitions is becoming increasingly unclear. The amount of resources allocated to these efforts, while small compared to Apple’s overall business, could be directed toward more profitable ventures. “I respect that they’re moving people toward artificial intelligence,” Jim said, though he doesn’t believe the shift will have a material impact on Apple’s position in the fierce race for generative artificial intelligence. Still, it’s a better use of resources than before. Apple declined CNBC’s request for comment on the Bloomberg report. AAPL’s year-to-date performance Some Wall Street analysts also welcomed Apple’s decision to stop making cars. Morgan Stanley analysts called this a “positive development” that shows welcome cost discipline and will ultimately allow Apple to “redirect assets to more important initiatives” such as generating artificial intelligence. Meanwhile, UBS predicts Apple will make a formal AI announcement this summer. Analysts say updated AI-integrated versions of Siri and Messages may be coming, along with a new processor for the iPhone 16. We’re particularly bullish on these innovative improvements to Apple’s flagship devices. “This is really going to be the next driver in the big upgrade cycle,” Jeff Marks, the club’s director of portfolio analytics, said Wednesday. (Jim Cramer’s Charitable Trust Buys AAPL, F, and MS. See here for a full list of stocks.) Subscribe as Jim Cramer’s CNBC Investing Club If you do, you will receive trade alerts before Jim Cramer trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation shall exist or arise upon your receipt of any information relating to the Investment Club. No specific results or profits are guaranteed.

On December 26, 2023, a woman walked through an Apple store in New York.

Eduardo Muñoz | Reuters

apple The company reportedly canceled its decade-long electric self-driving car project and CEO Tim Cook talked about the iPhone maker’s artificial intelligence vision, giving investors more to like about its stock reason.

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