Yahoo Finance

It's time now for Tech Support, our weekly deep dive into all things technology, and one tech name in particular stands out. Apple, year to date, Apple is the worst performing member of the Magnificent 7 stocks. Here to break down some of the challenges facing Apple, we've got Yahoo Finance Tech Editor Dan Howley. Dan, let's just start with trade. How is Apple impacted by tariffs?

Yeah, I mean, look when they, uh, the original liberation day tariffs were announced, uh, Apple was kind of seen as a sitting duck, right? I mean, Trump went hard after China, raising the tariffs eventually to 145%, and that really was going to impact Apple. They they source many of their their products from China. Uh, they got an exemption for their iPhones, multitude of their products. At the same time, they were moving some of the manufacturing for US bound products to India. Turns out, President Trump didn't like that. Uh, and so he called for 25% tariffs on iPhones as well as Samsung devices, if the, uh, the company doesn't start creating or building iPhones in the US. That's probably not going to happen. There's just a litany of reasons whether that's, uh, the workforce hasn't been spun up as far as training to be able to build these devices. There's no factories to do this yet. So, uh, it's unlikely that this will come to pass, at least within Trump's term, uh, uh, through the end of, uh, the next four years. And so, that's really where the tariff issue stands at this point. They continue to say that they're going to build the majority of devices destined for the US in India, some in Vietnam. Uh, and that really is kind of where we are with tariffs at this point. Apple had a reprieve briefly and now is under the gun again.

It's also facing some stiff competition from its rivals, especially when it comes to AI. What's the assessment on that front?

Yeah. Yeah, so the, in addition to just tariffs in general, Apple's been hit multiple times by analysts as well as just generally from Wall Street because it doesn't have the AI chops that other companies have. If you look at what Google's putting together, Microsoft's putting together with OpenAI, Amazon obviously, Meta, all these companies are spinning up their own AI capabilities and you know, Apple is leaning on its OpenAI partnership to add some of the generative AI capabilities to its smartphones. They also have their own gen AI large language models that you can use within your iPhone apps themselves, whether that's putting together some text or editing some images. But really they're not at the level that we'd expected and a big part of that has to do with the fact that Siri is delayed. There was supposed to be a generative AI version of Siri that was supposed to be out by now and it's just not here and they said they had to lay it to the end of the year and that just adds to this idea that Apple is behind when it comes to AI overall. And so, the, the, the truth of the matter is right now they're going into their WWDC developer conference next month. If they don't show that they have something there when it comes to Siri, it's going to be a tough show.

We only got 30 seconds left. Over the years, there's never been a leader like Tim Cook, especially when it comes to navigating some of these things. What do we anticipate this time?

Yeah, I mean look, this is the biggest test of his leadership so far. I mean, he got through the Covid supply chain crunch, navigated that fantastically. They managed to get devices out the door. You know, there was some lumpiness obviously in revenue at that point, but that was just kind of par for the course for the rest of the tech industry. This is a wholly different issue. There's four different things they're facing: antitrust problems, related to Google's antitrust matters, tariffs and more. So this is, it's a lot for him.