Apple offered investors more reasons to like its stock after the company reportedly canceled its decadelong electric, self-driving car project and CEO Tim Cook talked up the iPhone maker’s artificial intelligence vision. The tech giant announced the end to its autonomous EV pursuits internally Tuesday, Bloomberg News reported , citing people with knowledge of the matter. Many employees on the nearly 2,000-person team will be tasked to work on Apple’s AI unit instead, Bloomberg said. At Apple’s virtual shareholder meeting a day later, Cook said the technology giant sees “incredible breakthrough potential for generative AI, which is why we’re currently investing significantly in this area.” Cook’s comments are notable because Apple’s public embrace of the buzzy technology has generally lagged its Big Tech peers since ChatGPT launched in late 2022 and thrust generative AI into the mainstream. Shares of Apple are down roughly 6% year to date, including a 0.75% drop Wednesday. The S & P 500 , meanwhile, has climbed 6% in 2024. Despite the disparity, Jim Cramer reiterated his long-held mantra on the stock. “The reason why it’s been so hard to own Apple and not trade it is because you have these periods of underperformance where everybody questions the wisdom of owning the stock,” Jim said during Wednesday’s Morning Meeting . “The fact that they decided to not go for the car, well, thank heavens,” Jim added, citing the challenges and controversy facing existing self-driving vehicle efforts, such as General Motors ‘ Cruise and Waymo, which is owned by Club holding Alphabet . Sales of electric vehicles with human drivers also have grown slower than expected, as the industry struggles to reach mainstream adoption despite heavy investments in recent years from legacy automakers like Club holding Ford Motor and GM. Both companies have stepped up their focus on hybrid vehicles . In general, EVs have become a saturated market, though Tesla remains the dominant player in the U.S. There has been little public info about Apple’s self-driving car ambitions, but reports first surfaced back in 2014 when the company poached automotive engineers from other firms. The iPhone maker’s path toward commercializing its EV ambitions had grown increasingly unclear. The amount of resources likely allocated to these efforts – while small in comparison to Apple’s overall business – could be used for more profitable ventures. “I salute that they’re shifting people [to AI],” Jim said, even though he’s not convinced the pivot will make a material impact on Apple’s standing in the heated generative AI race. Still, it’s a better use of resources than before. Apple declined CNBC’s request for comment on the Bloomberg report. AAPL YTD mountain Apple (AAPL) year-to-date performance Some Wall Street analysts also cheered Apple’s decision to reportedly pull the plug on making cars. Morgan Stanley analysts called it a “positive development” that exhibited welcomed cost discipline and eventually would allow Apple to “repurpose assets towards more important initiatives” like generative AI. Meanwhile, UBS forecasted that Apple will come out with official AI announcements over the summer. An updated AI-integrated version of Siri and Messages, along with a new processor for the iPhone 16 could be on the table, analysts said. We’re especially bullish on innovative improvements like these for Apple’s flagship device. “That’s really going to be the next driver of a big upgrade cycle,” Jeff Marks, the Club’s director of portfolio analysis, said Wednesday. (Jim Cramer’s Charitable Trust is long AAPL, F, and MS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A woman walks near an Apple store in New York on Dec. 26, 2023.
Eduardo Munoz | Reuters
Apple offered investors more reasons to like its stock after the company reportedly canceled its decadelong electric, self-driving car project and CEO Tim Cook talked up the iPhone maker’s artificial intelligence vision.
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