Apple (NASDAQ:AAPL) stock has come into its own as “the” stock to buy for small investors. Smartphones define the 21st century economy. No one makes as many, or as much profit from them, as Apple.

Apple has held this position for over 15 years, ever since the late Steve Jobs said he had “one more thing” to show the press.

A Closer Look at AAPL Stock

For all its effort with TV, in watches, with computers, and with services, Apple is still a smartphone company. Three quarters of its $89.5 billion in revenue last quarter came from products, and most of that was the iPhone. The September quarter set another record for iPhone sales. While total revenue fell slightly, AAPL stock is still a confident buy.

The platform created by having over 2 billion active devices in use is immense. Apple Maps is now more popular with Apple users than Google Maps. It takes over one-third of Alphabet’s customer acquisition costs. That’s pure profit.

Whatever Apple wants, Apple gets. It has 15% of the music streaming business. It has 7% of the video streaming business. Wellness is a $1.5 trillion business and Apple is gaining share there.

In some ways, Apple is just getting started.

Apple’s Threat

The threat to AAPL stock doesn’t come from other device makers, it comes from generative AI. Apple wants you to think it has this threat in hand. It says generative AI will be in the next version of the iOS operating system. There are rumors the iPhone 16 will have its large language model built-in.

But AI is going to completely change how we use computers. Former Apple executives have already launched an AI pin with a large language model as its interface.

Apple was caught out by the generative AI boom. The $1 billion/year it’s spending on it is an ante in this game, like $1 billion/year was in cloud a decade ago. Samsung has already put a generative AI model on its devices, beating Apple to the market. Since much of that market will be in Asia, that’s meaningful.

Apple’s strategy is always to keep silent about innovation until it announces something. Apple bulls aren’t worried about AI. They insist Apple has the money to buy its way in.

The Bottom Line

History tells us that the threat of AI to Apple is real. Few companies, even enormous ones, can bridge the chasm between technologies.

AI is going to be bigger than the internet. While it will be built on the internet, and on devices like the iPhone, it will change how we interact with both in ways we can’t foresee.

Investors are paying 31 times earnings for Apple stock because it’s a safe pair of hands in this uncertain future. So was GM in your grandfather’s time. So was IBM in your dad’s time.

Apple isn’t a guaranteed loser here. But it’s not a guaranteed winner, either.

As of this writing, Dana Blankenhorn had LONG positions in AAPL and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.