This article first appeared on GuruFocus.
Apple (AAPL, Financials) launched the iPhone Air on Tuesday, its thinnest smartphone yet and the company’s boldest design shift in nearly a decade. But despite fan excitement, analysts questioned whether Apple is still falling behind rivals in artificial intelligence.
CEO Tim Cook opened the Cupertino event with a quote from Steve Jobs, emphasizing design as function as well as form. The iPhone Air, measuring 5.6 millimeters thick, undercuts Samsung’s Galaxy S25 Edge and features Apple’s new A19 Pro chip designed for AI tasks. It also includes custom communications chips and promises all-day battery life.
The iPhone Air headlines a lineup that includes the iPhone 17, 17 Pro and 17 Pro Max. Analysts at Morgan Stanley said the Air could drive higher upgrade rates over the next year, though they cautioned that its eSIM-only design may limit adoption in markets like China.
Apple shares dropped more than 3% Wednesday as investors worried about slimmer margins from tariffs and skepticism over Apple’s AI strategy. Rivals such as Google have leaned on AI features in their smartphones, while Apple has yet to show similar advances.
The iPhone Air is priced between the standard and Pro models and comes in $100 below Samsung’s Galaxy S25 Edge, which shipped 1 million units last quarter. Analysts expect the Air to boost sales in the holiday season despite its single-camera setup compared with multi-camera rivals.
Apple’s stock has fallen 6.4% this year, leaving its $3.5 trillion market cap trailing Microsoft and Nvidia. The iPhone Air will test whether design alone can reinvigorate Apple’s smartphone momentum while it works to catch up in AI.