Apple (AAPL) is undergoing a major shake-up among some of its highest-ranking executives. The exodus includes Jeff Williams, the now-former COO and previous frontrunner to succeed Tim Cook as CEO; AI chief John Giannandrea; governmental affairs head Lisa Jackson; design vice president Alan Dye, who is moving to Meta (META), and general counsel Kate Adams.
In a vacuum, each move would seem like the kind of thing that happens during the normal course of business at a massive company like Apple. But with the departures coming so quickly, you’d be forgiven for questioning whether the company is in crisis mode.
But that’s not exactly the case from a fundamentals perspective. Apple’s stock price is near all-time highs, the company’s market cap sits at over $4 trillion, and it reported record iPhone sales in its most recent quarter, with even higher expectations for Q1.
Services revenue is soaring, and Apple is reportedly preparing to launch a low-cost MacBook that could goose sales to schools and price-conscious consumers, according to TF International Securities’ Ming-Chi Kuo.
Still, there’s one glaring problem Apple needs to tackle: its failure to field an AI competitor that matches Google’s (GOOG, GOOGL) or Microsoft’s (MSFT) AI services.
And while Apple hasn’t said any departures are related to its AI troubles, analysts say at least two, those of Giannandrea and Dye, point to a change in strategy.
“I think that the changes that have happened are largely because Cook wants to shake things up,” Deepwater Asset Management managing partner and longtime Apple watcher Gene Munster told Yahoo Finance.
“And instead of being a follower in AI, he wants to be a leader,” he added. “So I think it’s more than just a typical transition. I think … this is a big deal.”
Apple’s ailing AI strategy
Giannandrea has served as Apple’s vice president of machine learning and AI strategy, which has struggled to keep pace with services like Google’s Gemini for Android phones. AI researcher Amar Subramanya is replacing Giannandrea as Apple’s vice president of AI and will report to head of software Craig Federighi.
Apple’s next-generation Siri, which the company first touted in 2024, is delayed until sometime in 2026. According to Bloomberg’s Mark Gurman, Apple has also had trouble with its own AI models and will instead pay Google roughly $1 billion a year to use that company’s Gemini to power the voice assistant. Apple would then switch over to its own models when they are ready.
Dye, meanwhile, helped develop Apple’s latest design interface. But rather than staying at the company, he’s heading to Meta (META) to lead the social media giant’s Reality Labs design team as it works to create new types of AI-centric consumer hardware.
“There is a renewed push by Apple to accelerate its AI roadmap, especially after criticism that its earlier AI efforts with Siri … lagged behind a lot of the rivals,” ZK Research founder and principal analyst Zeus Kerravala told Yahoo Finance.
At the moment, there’s little risk that Apple’s AI troubles will prompt customers to switch to Android smartphones or Windows PCs. The company’s fanbase is incredibly loyal, and despite the fact that Siri has left users wanting for years, iPhone and Mac users aren’t ditching their devices en masse.
“I think what makes Apple kind of unique is they can be behind [in] technology because of the fandom that’s around Apple and the ecosystem that they lock people into,” Kerravala said.
“I think, from an Apple perspective right now, it’s ‘make these changes now, and make sure you are positioned well,'” he added. “Or you are going to start losing share, eventually.”
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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