Who could respect Intel now? Try using an Android device and you might ask yourself, "Who could respect Google now?"
People in Silicon Valley generally respect money more than principles, so, yes, they still respect Apple. Even if they struggle to leverage their resources, they have the money to be an industry player and can't be dismissed.
> it's unclear why talented people work at Apple
This is a different question, but for many people the answer is the same.
Sure, hardware designers in the mobile space aren't excited to work for Apple because they're doing innovative things. But nobody in the mobile space is. The sector isn't attracting people who are driven to innovate, but people motivated by getting a paycheck. In contrast, Apple can certainly attract innovators in enterprise hardware.
They did attract innovators on the Apple Car project until they canned it, and they could certainly bring them back if they spun it up again. Opportunities to innovate in the automotive industry are limited and opportunities with funding more so.
AI is a bit different. They'll attract some talent because they can fund training models, but I think the funds involved and Apple's large corporate structure will actually hurt them here. I think we'll see more innovation come out of smaller research teams and startups that are willing to experiment (and risk failing entirely in the process).
You can't ignore giants like Apple and Google. But their resources don't always let them move faster than smaller teams on new, risky ideas.