My exposure to Apple (AAPL) is limited to ETFs, and I have not been interested in the name for years. In a previous article evaluating the best value among the Mag 7, I ranked Apple 6th. That is not because Apple isn’t a high-quality company, or a compounder. It is. Few businesses in the world can claim a return on invested capital consistently above 40%, expanding margins that would make any hardware maker envious, and the kind of scale that lets it dictate terms to suppliers and competitors alike. Its products and services reinforce each other in a web of network effects from the iPhone to the App Store to iCloud and Apple Pay. This has created one of the stickiest ecosystems in existence.
Instead, my criticism has come from a different place — Apple’s slowing growth profile and lack of genuine innovation. For years, the company has felt more like a sitting duck. Protected by its moat, yes, but increasingly defined by incremental refresh cycles rather than new ideas. That frustration was compounded by a valuation that seemed to reflect Apple’s defensive qualities more than its potential for growth or an innovative edge.
The stock price has mirrored these concerns. Over the past one- and three-year periods, Apple has underperformed the S&P 500 by double-digit percentages. This has left investors like me questioning whether its best compounding days are behind it.
That is why Bloomberg’s recent reporting on Apple’s plans to enter the smart home market caught my attention. For the first time in a while, the company is tied to a product area that could matter. The market seemed to agree. Apple’s shares have risen nearly 15% since that news, a sign of how hungry investors are for a credible growth story. And it’s given me a reason to give Apple real consideration again.
Why I Have Stayed Away From Apple
Before we get into why the Bloomberg story is exciting, it’s worth fleshing out why I lost interest in Apple in the first place. Understanding that history is essential to understanding why this rumor matters now.
The Numbers Tell the Story
Over the past several years, Apple’s growth profile has slowed:
These are large revenue numbers, and it is difficult to grow quickly at this scale. But it is also clear this is not the profile of a company inventing its way into the future.Revenue has been stagnant outside of 2021’s post-pandemic surge. EPS has risen more impressively, but the step-change came in that same year. Since then, earnings growth has been flat to modest, hardly the mark of a company firing on all cylinders. Yet despite that profile, Apple still trades at more than 30 times expected 2025 earnings, a valuation that seems rich for a company with limited growth momentum.
What buoyancy remains has been engineered. Gross margins have held near 47% and operating expenses have stayed flat as a share of revenue, a reflection of Tim Cook’s operational discipline. That skill set was a key reason he was elevated to CEO, and it has made Apple one of the most efficient businesses on earth. But efficiency is not the same as growth.
R&D spending has risen from about $8 billion in 2015 to more than $31 billion in 2024, and it now runs near 8% of sales. The pace of R&D growth has slowed in recent years, which may reflect both discipline and management’s limited conviction in reinvestment opportunities. Instead, the balance of cash use tilts toward share buybacks, where Apple has deployed hundreds of billions. Those repurchases have done more to lift EPS than new revenue engines. The result is enviable ROIC supported by efficiency and capital return rather than the kind of reinvestment and fresh product cycles that typically power a long-term compounder.
And that brings us to the deeper issue. For all its efficiency, Apple appears to have an innovation problem.
Lackluster Innovations
When Apple has made big bets, the results have not inspired confidence. The Apple Car burned billions before being quietly scrapped. The pursuit seemed odd from the start given the economics of the auto business. The Vision Pro was another ambitious bet that failed to resonate. Marketed as the next great device, the short-lived hype quickly faded, leaving it dismissed as little more than a very expensive cooking timer.
The bigger issue now, though, is Apple’s absence from the AI race. While Microsoft, Google, and Meta rush to weave generative AI into their products, Apple has been conspicuously quiet. Siri has seen only incremental upgrades. Rumors of acquisitions in the space underscore how far behind the company feels. Being late is not new for Apple — the iPod, iPhone, and Watch all arrived after competitors — but those products succeeded because they launched with clarity and purpose. The AI features integrated into the latest iPhone, by contrast, felt scattered, like a company without a plan. Without a breakthrough, even the iPhone could eventually lose ground to AI-native devices.
And this is why I keep coming back to that “sitting duck” image. Apple is still dominant. Its moat is wide, its products are beloved, and its profitability is the envy of the world. But in tech, standing still is dangerous. A bird that does not move is eventually a bird that gets caught.
The Rumor: A Smart Home Push
That is what makes Bloomberg’s recent reporting so intriguing. According to the leaks, Apple is working on a suite of smart home products. The list includes a display hub, a Face ID doorbell, an AI-driven security camera, and even a Pixar-like tabletop robot. All of it would be supported by a new operating system reportedly called “Charismatic,” designed to tie the experience together.
Apple has not confirmed any of this, but the rumors are credible given Bloomberg’s track record. More importantly, they finally point toward a category that could matter. Services has been Apple’s biggest success story in recent years, adding tens of billions in high-margin revenue and strengthening the ecosystem. But when it comes to new hardware that truly captured consumers’ imagination, you probably have to go back to AirPods in 2016. A meaningful push into the smart home could be the first step in closing that gap.
Why This Could Matter
The point is that this is not just about Apple selling another gadget. It is about entering a category with real growth potential. According to Precedence Research, the global smart home market is projected to grow from about $127 billion in 2024 to over $1.4 trillion by 2034. Even a modest slice of that market would be meaningful for Apple, given how stagnant revenue growth has been in recent years.
What makes this especially interesting is that no one really owns the home yet. Amazon has Alexa, Google has Nest, and Meta has dabbled with displays, but their devices have struggled with purpose. Most sit idle or handle narrow tasks. Apple’s rumored lineup backed by a dedicated operating system, could pull all of these functions together into something coherent.
That coherence is the growth lever. Each device reinforces the others, and more importantly, reinforces Apple’s existing lineup. iPhones, iPads, and wearables become natural control panels, useful both inside and outside the home. Services like iCloud, Music, Fitness+, and TV+ get more embedded into daily routines. This is the logic of Apple’s ecosystem at work. Products and services feed into one another, and the potential for horizontal integration across smart home offerings could extend, and even strengthen, Apple’s moat.
Robots Need Purpose
And then there’s the robotics angle. Apple would not be first here. Tesla has Optimus, Dyson and Samsung have tested prototypes, and Amazon tried Astro. The issue is not a lack of experimentation but a lack of purpose. So far, most robots feel like novelties. They follow you around, show you a screen, maybe play music. They are interesting demos, but not things that change how people live.
Where Apple could change that is by anchoring robotics inside its ecosystem. Imagine a household assistant that is not just rolling around the living room, but is integrated into HomeKit, iCloud, and your devices. It could handle security by syncing with a Face ID doorbell and cameras, manage routines like climate and lighting, or extend Siri into a genuinely useful household presence. That’s still speculative, and Apple’s track record on new categories is mixed, but if any company has the design discipline and ecosystem to give robotics a real purpose, it is Apple.
The market opportunity is huge. Competitors are vulnerable. And Apple has the platform to make the home its next growth engine.
The Question for Investors
Of course, we have been here before. Apple has taken big swings that failed to deliver. The question is not whether the smart home market is a big enough opportunity. It is. The question is whether Apple still has the innovative edge to execute.
Competition is fierce. Amazon and Google already have a foothold. Meta is experimenting. Specialized players are entrenched in categories like security and audio. Apple’s ecosystem and privacy reputation are real advantages, but they will not matter if the products fall short.
Even so, this is the first rumor in years that has made me genuinely interested in Apple again. The numbers tell the story of a company leaning too heavily on efficiency. The story has been one of missed opportunities. But a true smart home strategy could change that.
So I will end where I started: Apple is a high quality company. No question. But it has been a sitting duck for too long. The question now is whether it’s finally ready to take flight once more.
Disclosure: I have no equity position in Apple Inc. (AAPL).
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