Apple Has 'At Least Two Years' Before Losing Customers Despite Its Several AI Missteps, Says Gene Munster — Here's Why

Deepwater’s Gene Munster, a prominent tech analyst, has shared his insights on Apple Inc.‘s AAPL upcoming Worldwide Developers Conference (WWDC) and the company’s future in artificial intelligence (AI).

What Happened: In a post on X on Tuesday, Munster suggested that the WWDC would focus on traditional operating system updates, leaving investors questioning Apple’s timeline for losing customers. He estimated that Apple has about two years to get its AI strategy right, but it will require increased investments.

In a detailed report, Munster emphasized that Apple’s customer base, which is highly loyal due to the seamless integration of Apple products and services, gives the company a significant advantage. He pointed out that an average Apple customer owns 1.7 devices and uses 1.5 services.

Munster also pointed out that the current competition in AI devices is lagging behind, with no “must-have” features compelling Apple users to switch. He concluded by noting that the much-anticipated AI-first device from the Jony Ive–Sam Altman collaboration is expected to be unveiled next year and released in 2026.

However, he highlighted the importance of increased investment in AI as Apple is lagging in this area. Since 2021, Amazon AMZN, Google GOOG GOOGL, Meta META and Microsoft MSFT have ramped up capital expenditures by about 30% annually to support AI growth, with average spending rising from $30 billion in 2021 to an estimated $77 billion by 2025. In contrast, Apple's capex has remained flat at around $11 billion, even slightly declining by 1%.

Munster believes investing more is the right strategy to ensure long-term control over features and privacy, which requires owning a top-tier AI model.

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Why It Matters: Munster’s predictions come at a crucial time for Apple, which has been facing criticism over its AI efforts. In March, ahead of Apple’s annual Top 100 executive retreat, Munster had called out the company’s stalled AI efforts. The retreat was seen as an opportunity for Apple to address these concerns.

However, in April, it was reported that Apple had undergone a major restructuring of its AI team due to performance concerns. This move, which involved shifting elements to different departments within the organization, indicated that Apple was taking the criticism seriously and working to improve its AI capabilities.

Despite the challenges, Munster’s recent comments suggest that Apple still has a window of opportunity to strengthen its position in the AI market, provided it makes the right investments and improvements.

Benzinga’s Edge Rankings place Apple in the 79th percentile for quality and the 33rd percentile for growth, reflecting mixed performance. Check the detailed report here.

On a year-to-date basis, the shares of Alphabet dropped 16.64%, according to data from Benzinga Pro.

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