Apple’s AI Stumble Casts Shadow Over Record Holiday Forecast

As 2025 draws to a close, Apple presents a complex picture to investors. The technology giant anticipates its highest-revenue holiday quarter in history for the current period. However, this positive outlook is tempered by a significant strategic delay: the promised AI revolution for its Siri assistant, a key selling point for the iPhone 16, has been postponed and is now slated for 2026.

The delay of the generative AI version of Siri, originally pledged for 2025, represents a broken promise and a central concern for shareholders. Compounding this strategic setback is a major leadership transition within the AI division. John Giannandrea, the head of AI, is departing the company. His role will be assumed by Amar Subramanya, a former Google and Microsoft executive, who takes the helm at a time when Apple is perceived to be lagging behind those very competitors in the artificial intelligence race.

Executive changes extend beyond the AI team. Chief Operating Officer Jeff Williams has retired. Furthermore, reports indicate that CEO Tim Cook is preparing hardware chief John Ternus as a potential successor. This period of transition coincides with notable insider selling activity, with company insiders divesting shares worth $58.6 million last quarter. In a parallel move, Warren Buffett's Berkshire Hathaway continued to reduce its substantial position in Apple stock.

Should investors sell immediately? Or is it worth buying Apple?

Services Division Provides Consistent Strength

Amid these challenges, Apple's Services segment remains a steadfast pillar of stability and profitability. This division reported a 15% growth rate for the fourth quarter, boasting a gross margin of 75.3%—more than double that of the hardware business. Company leadership projects this double-digit growth trajectory will continue into 2026, providing a crucial counterbalance to other uncertainties.

The Overlooked Threat of Rising Component Costs

While less prominent in current discussions, rising memory chip prices present a latent risk. Analysts from Bernstein note that Apple's long-term supply contracts have currently insulated it, estimating the present financial impact at a modest 0.3% of earnings per share. The real test will come during negotiations for components destined for the iPhone 18, where the cost burden could potentially escalate to 4%.

Market Performance Defies Near-Term Headwinds

Despite these sequential setbacks, Apple's share price demonstrates remarkable resilience, trading only marginally below its all-time high. The equity continues to command an ambitious valuation, reflected in a price-to-earnings multiple of 36.5. The central question for investors is whether Apple can justify this premium. The answer hinges largely on the successful execution of its delayed AI offensive in 2026 and the potential launch of a foldable iPhone.