Imagine watching your competitors race ahead in the AI revolution while you’re still hesitating at the starting line. That’s the anxiety Apple, once the undisputed leader of tech innovation, is grappling with today. As the company prepares for its annual Worldwide Developers Conference (WWDC), its stock price has hit its lowest point since 2010. What lies behind this crisis?

AI: Apple’s Achilles’ Heel?

There’s no denying that AI has become the next battleground in the tech industry. Rivals like Microsoft, Amazon, and Google have poured billions into AI development, achieving significant breakthroughs. Yet Apple’s progress in this field has been conspicuously slow. Last year’s WWDC introduced Apple Intelligence, but the lukewarm reception and delays in upgrading Siri’s AI capabilities suggest that AI won’t be the star of this year’s show either. As Craig Moffett, an analyst at MoffettNathanson, bluntly put it, Apple is treading carefully to avoid overpromising or showcasing unfinished features. This caution may well be emblematic of Apple’s lag in the AI race.

Tariffs, Fees, and Lawsuits: A Multilayered Crisis

Beyond AI, Apple faces mounting pressure from tariffs, App Store fees, and legal battles. Former President Donald Trump’s tariffs on Chinese-manufactured hardware threaten to squeeze Apple’s profit margins further. Additionally, Trump’s push to reshore production adds uncertainty to Apple’s supply chain.

Equally troubling are the legal and regulatory challenges targeting Apple’s services business, particularly its App Store fees and Google’s default search payments. The App Store’s commission structure has long been contentious, and Google’s billion-dollar payments to remain the default search engine on Apple devices are now under legal scrutiny. Laura Martin, an analyst at Needham, warns that Apple’s revenue growth, profit margins, and valuation multiples face tangible risks.

iPhone: Can It Reignite Growth?

With AI yet to become a significant revenue driver, Apple desperately needs a catalyst to spur iPhone upgrades. However, sales of its flagship product have stagnated for two consecutive years, with projections indicating flat growth in 2024. FactSet data suggests iPhone revenue will grow by just 3% in fiscal 2026. Martin notes that for Apple’s stock to rebound, a new iPhone upgrade cycle is essential—but that’s unlikely to materialize soon.

Apple’s Future: Innovation or Decline?

Despite boasting over 2.35 billion active devices and strong user loyalty, Apple risks losing its dominance if generative AI continues to evolve and spawns a new generation of devices. OpenAI’s recent poaching of Apple’s legendary designer Jony Ive to develop 100 million AI-powered devices—potentially launching as early as next year—adds another wildcard to the mix. Apple has long thrived on secrecy and surprise, but today, it must juggle global supply chain disruptions, legal disputes over App Store fees, and Google’s search payments. In contrast, AI development, at least, remains within Apple’s control.

Can WWDC Turn the Tide?

With challenges mounting, all eyes are on WWDC. Can Apple deliver a game-changing innovation to reclaim its position as a tech leader? Here’s what the company must do:

  • Go All-In on AI: Apple must accelerate its AI investments, upgrading Siri and developing new AI-driven tools like assistants and creative applications. Leveraging its hardware-software integration, Apple can craft a unique AI experience.
  • Diversify Beyond iPhone: Relying solely on the iPhone is unsustainable. Apple should explore new product lines—AR/VR headsets, smart home devices—and alternative revenue streams like subscriptions and content creation.
  • Embrace Partnerships: Collaborating with OpenAI, automakers, and other tech firms could fast-track innovation in AI and next-gen devices.
  • Resolve Legal Disputes: Addressing App Store fee controversies and renegotiating deals with Google could mitigate regulatory and reputational risks.

WWDC: A Make-or-Break Moment

For Apple, WWDC isn’t just a developer conference—it’s a pivotal battle for its future. A strong showing with groundbreaking products could reignite growth, but continued AI stagnation and unresolved disputes may deepen its challenges. The ball is in Apple’s court.

What Should Investors Do?

Apple remains an attractive stock, thanks to its brand power, loyal user base, and robust cash flow. However, AI competition, tariffs, and legal risks loom large. Investors should monitor Apple’s AI progress and its ability to navigate these headwinds. Only a successful pivot to new growth drivers will restore Apple’s stock to its former glory.

The Road Ahead

Apple’s future is uncertain. Whether it can reinvent itself and reclaim tech leadership remains to be seen. But one thing is clear: Apple won’t go down without a fight. The world will be watching.