| By Andy Swan
“We're perfectly fine with not being first. As it turns out, it takes a while to get it really great.” – Apple (AAPL) CEO Tim Cook In the artificial intelligence (AI) race to the top, Apple has taken a contrarian approach. Cook described Apple's AI strategy as “Not first, but best,” emphasizing that the company prioritizes quality over speed. Critics mocked it – claiming Apple lagged far behind tech peers. 
No ChatGPT rival, no billion-dollar data center race, no scramble to keep up with OpenAI and Google (GOOGL). Instead, Apple prioritized embedding AI into its ecosystem without the runaway spending its competitors pursued. The divergence is striking. While Google, Microsoft (MSFT), and Meta Platforms (META) poured tens of billions into cloud-based AI, Apple kept its capital expenditures in check – down 6% year over year – even as it expanded AI-driven experiences. 
Apple made a bet early on that AI models would become commoditized, shifting the real competitive advantage to integration and user experience rather than pure model performance. DeepSeek’s release of an open-source AI model is the latest proof that AI development is no longer a moat. As advanced models become more accessible, differentiation moves to application and efficiency. Apple is positioned to profit by integrating AI seamlessly into its hardware and software without the immense infrastructure costs borne by its competitors. We see AAPL as a contrarian AI play with upside potential… | Recommended Link | | | | According to my proprietary quant crypto algorithm, President Trump’s first 100 days in office will be mission critical for the crypto market. Most people could be blindsided and be completely left behind. But if you know what coins to invest in, you could actually make more money in Trump’s first 100 days in office than in his entire four year term… Which is why this Thursday at 10 am ET, I’m hosting a special event to give you all the details. Including the details on three coins I just found with my proprietary algorithm that could soar in Trump’s first 100 days. It’s called The Great American Crypto Project. Click here to instantly save your seat. |  | | A Focused, Efficient, and Profitable AI Approach Unlike rivals, Apple has avoided the capital drain of AI-specific data centers. Instead, it has embedded AI directly into products, enhancing user experience through features like personalized content recommendations, real-time photo and video enhancements, and an evolving Siri (though Siri still has a long way to go). Apple Intelligence, its suite of AI tools, is built for efficiency, delivering real-world benefits without requiring massive cloud computation. One key example: Apple’s on-device AI handles tasks like text generation and image creation locally, reducing reliance on cloud infrastructure while improving speed and privacy. By leveraging AXLearn, an open-source AI framework, Apple gains access to rapid innovation without locking itself into costly proprietary ecosystems like Nvidia’s (NVDA) CUDA. However, Apple maintains control over the final experience by applying proprietary filtering algorithms and optimizations, ensuring that AI aligns with its hardware and privacy-focused ecosystem. Apple Intelligence Is Driving iPhone Demand Apple Intelligence is already driving demand across Apple’s ecosystem. CEO Tim Cook confirmed on the company’s earnings call last week that iPhone 16 models saw stronger sales in regions where Apple Intelligence was available. AI-powered personalization, enhanced Siri capabilities, and real-time assistance reinforce Apple’s customer lock-in, boosting upgrade cycles and increasing hardware demand. Apple’s AI extends beyond the iPhone, too. iPads and Macs are expected to receive expanded AI-powered functionalities, further integrating AI into daily workflows. As more devices receive AI-driven enhancements, the value proposition for upgrading within the Apple ecosystem strengthens. Building a Profitable Ecosystem With 2.35 billion active devices and $26.3 billion in services revenue, Apple’s ecosystem continues to scale. The interplay between AI, hardware, and services drives higher engagement, recurring revenue, and long-term profitability. Rather than chasing AI supremacy, Apple embeds AI where it meaningfully enhances user experience, ensuring monetization through hardware sales, increased ecosystem engagement, and subscription revenue. This disciplined strategy ensures profitability while competitors burn cash chasing AI dominance. | Recommended Link | | | | On March 18th, an event is taking place that could completely shock the market. Stocks could go ballistic… Businesses could get blindsided… The gold market could get rocked… And one man, millionaire trader Jeff Clark is pounding the table on one single stock before this event. Because this one single stock has shown his readers gains of 85% in 14 days, 120% in under 3 months, and even 222% in just 8 days. While the past is no sure indicator for the future… Those gains could pale in comparison to what’s coming. Click here now to see what’s going on. |  | | AAPL: The Contrarian DeepSeek AI Play Wall street has yet to fully recognize Apple’s AI advantage. Despite last week’s bullish earnings report, featuring 14% year-over-year growth in services revenue and a double-digit increase in paid subscribers, AAPL shares came under pressure this week amid tariff concerns and near-term underperformance. 
Source: TradingView Some investors remain singularly fixated on standalone AI companies, yet Apple’s strength lies in embedding AI across its ecosystem, ensuring monetization through hardware, software, and services. We think it’s important to build a portfolio that capitalizes on all value-driven opportunities created by AI. Bottom line: Apple’s AI strategy prioritizes efficiency, user value, and ecosystem-driven growth. As AI adoption scales, Apple’s approach positions it as a long-term winner. Until next time, 
Andy Swan
Founder, LikeFolio Discover More Free Insights from Derby City Daily Here’s what you may have missed from Derby City Daily this week… ✓ Ignoring Tesla’s 10x Value Proposition Is a Fatal Mistake ✓ Two Ways to Play a Financial Services Divergence ✓ The Opportunity in DeepSeek’s AI Disruption | 
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