Will Apple Get ‘BlackBerried?’

On the June 22 episode of The Morning Filter podcast, host Susan Dziubinski sits down with Morningstar senior technology stock analyst William Kerwin at the Morningstar Investment Conference to discuss Apple AAPL stock, artificial intelligence, and what risks exist in the market for the tech giant. Here’s an excerpt from the episode.

Susan Dziubinski: Let’s talk a little bit about risks that Apple may be facing. It sounds like we think that they’re sort of righting the ship with AI that might’ve been a potential risk for them. What should investors then really be keeping an eye on from a risk perspective?

Will Kerwin: I think disruption risk is the biggest thing always for Apple. They did something to BlackBerry 15 years ago, and everyone is constantly worried about: Is Apple going to get “BlackBerried” themselves, so to speak? I think with AI now, you have this new threat on the horizon. Could this introduce a new type of device that we haven’t heard of before? But effectively, we think they are effectively defending against that disruption risk. That is underpinned by that wide moat rating that I talked about. The wide moat rating comes with a 20-year time horizon of confidence for us. We expect them to retain this competitive position, this strong position, for the next two decades. Really, when it comes to AI, I think about it like this: AI is software. We’re learning how to use it. We’re using it on these applications, but at the end of the day, in my opinion, for the foreseeable future, software has to be consumed on hardware on a device, and Apple really is the preeminent device maker.

We see it as very well-positioned to integrate AI into its software ecosystem on its devices and maintain this really strong leadership position that it has. Outside of that, you have some risk from the supply chain in China that we think Apple is adequately diversifying away from. You have some antitrust risk out of the EU that is a little bit in the rearview mirror, but still a little present. It’s a large company. There are always a bunch of risks involved, but I really think the most about AI, and we think they’re doing a good job hedging against that.

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