Apple's 'Time Bomb'

The current iPhone cycle is showing weakness, with revenue growing just 1.6% in the second half of 2024. Despite this, Apple's stock is still highly valued by the market, even outperforming many other tech giants.

Expectations for breakthroughs in artificial intelligence (AI) have been a major driver of this valuation, but that confidence was shaken this past week after reports that Apple was delaying the launch of significant AI upgrades to its Siri virtual assistant.

Risk of falling behind

First introduced in June 2024, the new version of Siri is expected to be able to exploit user information, serve searches and respond to advanced commands. Apple planned to update Siri in April through iOS 18.4. However, according to the latest information, the expected release date has been postponed to 2026.

Bloomberg previously reported that Apple was having trouble finalizing a new feature set for Siri. Apple engineers were trying to fix the bug in time for release with iOS 18.5. However, everything failed, causing the plan to be delayed.

Editor Mark Gurman said that Craig Federighi, senior vice president of Software Engineering, and Apple leaders were “deeply concerned” when features didn’t work properly (or as advertised) after the trial period.

iPhone 16 and Apple Intelligence advertisement. Photo: Bloomberg.

“Some people in Apple’s AI department think the entire plan could be scrapped and the company would need to build the features from scratch, which would put the Siri update at 2026 at the earliest,” Gurman said.

The delay has dampened expectations for a big AI push for the new iPhone lineup expected to launch this fall.

"The delay in the launch of an improved Siri means Apple will have fewer features to drive iPhone upgrades in fiscal 2026," Morgan Stanley analyst Erik Woodring said.

The news has hit Apple's stock price hard, with the company's stock down nearly 11% over the past week, its worst performance since late 2022. That's even worse than other major tech stocks that have been on the sell-off amid tariff concerns.

After Siri, what's next for Apple?

The WSJ suggests the gloomy situation could last for some time. Apple typically keeps product and software information under wraps until it’s ready to launch, and major software announcements are typically made at its June conference.

If AI doesn’t make a difference, the iPhone 17 series may need other improvements to boost demand. This is entirely possible, as Apple is reportedly planning a thinner design for this year’s iPhone models, but that information will only be confirmed at the annual iPhone launch event in early September.

Siri is gradually being left behind by its competitors in the AI ​​race. Photo: The Verge.

However, the leaked information is not very optimistic. According to a report by Bloomberg , Robby Walker, Senior Director in charge of the Siri development team, admitted that the delay is a bad situation.

Notably, he said that the AI-powered features built into iOS 19 are unlikely to arrive this year. “Apple has commitments to a lot of projects. We want to keep our credibility on those projects and prioritize the urgent features,” Robby Walker said.

Currently, Siri on iOS 18 has two “brains”: one to operate the old system, one to handle advanced queries. The lack of integration between the two systems makes the software run less smoothly.

That means Apple is more than half a decade behind schedule. On top of that, the company’s competitors aren’t standing still. The market landscape could look very different in two years, especially with the proliferation of AI startups.

Given the weaknesses in AI implementation, Jefferies analyst Edison Lee even downgraded Apple's stock to "sell".

“Even if the iPhone gets a new design in the next two years, volume growth is likely to slow if AI takes longer to materialize,” the expert said.

Apple has yet to make a new statement about the Siri feature. However, Walker asserted that senior managers including software chief Craig Federighi and AI chief John Giannandrea are directly responsible for this delay.

Without AI support, the iPhone 17 series may need other improvements to stimulate demand. Photo: New York Times.

“Customers don’t just want new features, they want a complete version of Siri,” Walker stressed.

In recent years, Apple has been slow to enter new markets. It wasn’t the first company to sell smartwatches, smartphones, or wireless headphones, but its products have all been successful. Even the Vision Pro has impressed with its technology despite poor sales.

With Apple Intelligence, the company has fallen behind ChatGPT, Google Gemini, and Microsoft Copilot. Despite being launched later, the system still cannot keep up with its competitors. Any mistakes could have major consequences for the future of the Apple.