- Apple is the 'hidden AI play,' as its hardware will be the key hub for AI apps, Steve Eisman told CNBC.
- Once these apps start appearing, consumers will replace everything from phones to laptops.
- In coming weeks, Apple could notch new upside catalyst from a possible partnership with Google, Morgan Stanley said.
While markets focus on Nvidia's imminent earnings release, legendary investor Steve Eisman is trumpeting a separate artificial intelligence winner:
"I think Apple is actually the hidden AI play. Not exactly today, but will be," Eisman told CNBC on Tuesday. "Everybody's focused on the chips. Everybody's focused on the cloud. But at the end of the day, when there will be apps — and I have no idea when it's going to be — but when there'll be apps that the consumer can use, they're going to want to use it on their phone."
The Neuberger Berman senior portfolio manager, famous for his 2008 subprime mortgage short depicted in the book and the film "The Big Short," has been bullish on AI. Speaking to the outlet, he said that semiconductor chipmakers, such as Nvidia and AMD, are currently the easiest ways to play into the tech trend.
But looking farther out, it's Apple that will be the key hub for AI-led software, fueling massive upside for its products, he said.
"I know for sure that when all those apps come on, I'll need a new phone, and I'll need a new iPad, and I'll need a new laptop," Eisman continued. "And so when the apps show up, the biggest, probably, beneficiary is going to be Apple, because they're going to have a refresh of literally everything that they sell."
This sort of thinking goes beyond Eisman, as other Wall Street bulls have also amplified calls on Apple. Part of that's driven from the firm's winning earnings report; during the call, CEO Tim Cook teased exciting opportunities related to generative AI.
It's prompted some analysts, such as Bernstein's Toni Sacconaghi, to suggest an AI-enabled phone is on its way and could come with the arrival of the iPhone 16. He's promoted buying shares in the firm before the next phone is released.
The company had a difficult start to 2024, as Wall Street focused on headwinds, including competition in China. But now, Apple has climbed over 16% in the past month.
Eisman acknowledged that software upside might not just be limited to Apple, and could also uplift others, such as Microsoft. More insight will come once the apps start appearing.
In coming weeks, Apple could see a fresh catalyst at its Worldwide Developers Conference on June 10th, where an AI partnership with Google could be announced.