Apple's "F1" achieves great success, but the AI dilemma remains to be resolved

Apple welcomed two major releases last month, resulting in starkly different outcomes.

On July 4th, according to media reports, the movie "F1" launched by Apple grossed over $155 million in its opening weekend and received rave reviews, but Wall Street's lukewarm reaction to Apple's AI announcements at the Worldwide Developers Conference (WWDC) exposed the challenges the tech giant faces in the field of artificial intelligence.

The report suggests that the success of the movie "F1" highlights the effectiveness of Apple's long-term investment strategy. Since the launch of Apple TV+ in 2019, Apple has been committed to expanding its entertainment business, ultimately achieving a breakthrough with original content leading the box office during the summer season. This film not only brings box office revenue but also serves as an important showcase for Apple's services business.

In contrast, Apple's AI progress has disappointed investors. At WWDC, the company failed to showcase the advanced Siri features that investors and consumers were hoping for, and the promised major Siri upgrade has been postponed until 2026. Analysts have thus lowered their expectations for Apple's AI capabilities to drive device upgrade cycles.

Previously, Wall Street Journal reported that Apple is considering replacing the Siri engine with technology from Anthropic or OpenAI, which would contradict Apple's strategic principle of owning core technologies, highlighting the company's lagging position in the AI race. However, Wall Street reacted positively to this news, with Apple's stock price rising by as much as 2% on that day and nearly 6% for the week.

"F1" Showcases Service Business Potential

Apple's first true blockbuster "F1" achieved over $155 million at the box office during its opening weekend, marking a significant breakthrough for the tech giant in the field of entertainment content.

This success stems from Apple's long-term commitment. When Apple TV+ launched in 2019, it had only a few original series and a film called "Hala." Although Apple TV+ was once seen as a costly side project, Apple persisted with its plans, expanding its team and operations in Culver City, California.

To promote "F1," Apple leveraged its powerful marketing mechanisms.

The company even pushed movie ticket discount notifications to users through the Wallet app. CEO Tim Cook appeared at the New York Apple Store alongside movie star Brad Pitt and recorded promotional videos with one of the film's producers, F1 driver Lewis Hamilton.

Although the movie business accounts for a small portion of Apple's vast services sector, it has unique marketing value. The services business includes various areas such as payments, iCloud subscriptions, magazine bundles, Apple Music, gaming bundles, warranty services, digital payment fees, and advertising sales, making it a profit engine that investors have focused on since 2016.

Major Setback in AI Development

At WWDC, Wall Street was eager to learn about the latest developments in Apple's Intelligence suite, but the results were disappointing.

Wall Street Insight previously reported that Apple mainly showcased some smaller machine learning features and failed to launch the advanced version of Siri that investors and consumers were expecting.

In an era where AI assistants like ChatGPT, Claude, and Gemini are rapidly evolving, consumer expectations for AI assistants have far exceeded simple queries like "Siri, what's the weather today?" Apple had previously previewed significantly improved Siri features for the summer of 2024, but these have now been postponed to 2026.

Jefferies analysts wrote this week:

We believe that the current expectations for Apple's Intelligence to drive a super upgrade cycle are overly optimistic.

Siri has been around for 14 years since its debut on the iPhone in 2011, but it essentially remains the same rigid Q&A system, struggling with open-ended questions. In contrast, Apple's main competitor, Google, has done more to integrate advanced AI assistants into its devices.

Needham senior internet analyst Laura Martin stated:

The question in three years is whether Android is rapidly surpassing Apple, which is a real threat within the investment time frame