(Bloomberg) -- Apple Inc.’s move to shutter its electric car efforts and divert those resources to artificial intelligence projects might have emboldened traders a year ago. Instead, the stock’s slump has only deepened.

The Cupertino, California-based company has revealed very little about its AI efforts, with Chief Executive Officer Tim Cook promising shareholders last week that Apple would “break new ground” in AI. Investor impatience is growing, with the stock slumping 12% this year, pulling its market value below Microsoft Corp.’s. 

“Investors found this thing called generative AI that captured their attention last year and it’s taking money away from other tech companies because people want to be in the hottest thing,” said Kim Forrest, chief investment officer at Bokeh Capital Partners LLC. “Rightly or wrongly, Apple has to show that it’s still relevant in a world where investors want AI.”

Read More: Apple to Wind Down Electric Car Effort After Decadelong Odyssey

Apple’s pivot comes as iPhone sales remain sluggish, with sales in China plunging during the first six weeks of this year. Its biggest new product release in years, the Vision Pro headset, is a long way off from contributing to sales growth in any meaningful way. 

“There’s been a real focus on how Apple hasn’t come out with some killer product in a very long time,” said David Klink, senior analyst of equity research at Huntington National Bank. “Obviously it’s been kind of a hard time for Apple holders to watch Nvidia and whatnot.” 

Wall Street is becoming more skeptical of the megacap giant. Apple was recently removed from Goldman Sachs’ conviction list and Evercore ISI’s tactical outperform list. The company has the lowest ratio of buy ratings to holds and sells since 2020. 

Read More: Apple’s iPhone Struggles in China Deepen With a 24% Sales Plunge

“Forget the car, what matters most for this stock is the AI strategy launch,” Melius Research analysts led by Ben Reitzes wrote in a note dated March 4. “To us, it is the most important launch since the iPhone.” 

While Apple’s move away from EVs has been broadly welcomed, analysts are looking for the company to release its own generative AI product. Samsung Electronics Co.’s updated Galaxy line of smartphones can live-translate phone calls, transcribe voice recordings and use generative AI to fill in parts of photos. 

“Samsung has a generative AI phone right now and is getting a lot of positive buzz about it, and Apple doesn’t yet,” noted Rhys Williams, chief strategist at Wayve Capital Management. “Apple doesn’t have some of the current momentum drivers and so it’s lagging a bit, so I think it’ll be a second half story if some of these new products actually get out the door.”

Still, for bulls, the company’s potential to capture public imagination with an AI enhancement means that investors should be patient. Melius analysts see new AI services driving users to upgrade their iPhones, kicking off a “supercycle” in 2025. 

“It’s time for a deep breath,” wrote Melius’s Reitzes, noting that 99% of Apple’s installed base of more than 2.2 billion devices “are never going to switch to Android — so a ‘comeback’ is likely.”

And, long-time investors say that being a late mover is nothing new for Apple. Counting them out in the early innings of the AI cycle would be a mistake, according to Robert Conzo, CEO and managing director at The Wealth Alliance LLC. 

“Apple’s doing what Apple does best — it kind of waits, sits back and then sees how it’s going to position its products to take advantage of the AI craze,” he said. 

Tech Chart of the Day

Apple Inc. has erased more than $300 billion in market value since its shares closed at a record in December and has entered a technical correction for the first time since August. A disappointing forecast, shrinking business in China, hefty regulatory fines and a lack of new hit products caused the iPhone maker’s stock to drop more than 10% from its peak, underscoring the risks to its supply chain in particular. 

Top Tech News

  • Advanced Micro Devices Inc. hit a US government roadblock in attempting to sell an artificial intelligence chip tailored for the Chinese market, according to people familiar with the matter, part of Washington’s crackdown on the export of advanced technologies to the country.
    • China pledged to harness the entire nation’s resources to speed homegrown scientific breakthroughs, reaffirming a central priority to become self-reliant in spheres from AI to chipmaking to wrest technological supremacy from the US.
  • Alibaba Group Holding Ltd. is leading a financing round of at least $600 million for Chinese AI startup MiniMax, spearheading its second major deal in the space this year as it unleashes capital in pursuit of growth
  • RapidSOS, a startup that uses artificial intelligence to help emergency response teams, raised a $75 million investment led by BlackRock Inc. funds.
  • Nio Inc.’s annual loss widened last year as the Chinese electric-vehicle maker faced fierce competition in the world’s biggest EV market.
  • Nearly half of India’s internet users watched movies, television shows, news and sports on streaming platforms owned by Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. and Walt Disney Co. before they merged to form a media giant, according to Virgina-based data analytics firm Comscore.

Earnings Due Tuesday

  • Postmarket
    • CrowdStrike
    • HashiCorp

--With assistance from Abhishek Vishnoi and Subrat Patnaik.

(Updates stock moves, adds quote after third paragraph.)

©2024 Bloomberg L.P.