Since the launch of OpenAI’s ChatGPT in 2022, the artificial intelligence (AI) landscape has evolved rapidly, with Apple Inc. perceived as a follower rather than a leader in the field. The once unrivaled tech giant notably lacks generative pre-trained transformers (GPT), foundational models, and standout AI-focused products like its competitors Google, Microsoft, Meta, and Nvidia.
Microsoft has significantly invested in OpenAI and incorporated its generative technology into various services such as Azure and Office, while Nvidia’s GPUs dominate the AI infrastructure market. With combined market valuations of around $3.7 trillion, these companies overshadow Apple, which is currently valued at approximately $3 trillion.
Historically, Apple has concentrated on consumer hardware and services rather than establishing itself as an AI-first business. However, with the introduction of Apple Intelligence, the company is signaling a new direction to weave AI more profoundly into its ecosystem, prioritizing initiatives around privacy, security, and user experience. To achieve this, Apple is using on-device language models for tasks such as text drafting and image generation. Additionally, for more intricate tasks, it incorporates OpenAI’s GPT-4o, with plans to allow users access to alternate models like Google’s Gemini.
Although Apple’s AI acquisitions have not garnered widespread attention—which include over 30 companies such as Turi and Xnor.ai—these investments have strengthened essential features across its services, notably Siri and Photos. This integrative approach aligns with Apple’s long-standing strategy of absorbing technological innovations that enhance its products. There are reports of a potential acquisition of Perplexity AI, although the company has denied these claims.
Google’s agreement to pay Apple around $20 billion annually to remain the default search engine for Safari highlights the competitive dynamics at play. Should regulators challenge this deal, Apple might explore alternatives like Perplexity to maintain its search capabilities. Nevertheless, Apple’s position in the market appears stable, particularly as its services business is projected to surpass $100 billion in revenue with a high gross margin of 74%, significantly outperforming its hardware margins.
Meanwhile, while Google and Meta face their unique challenges—such as vulnerabilities in their ad-driven models—Apple’s approach appears to act as a complement to its core business rather than disrupt it. By strategically adopting AI technologies as they become more mature, Apple is well-positioned to integrate advanced functionalities across its vast user base of over a billion paid subscriptions.
Nonetheless, risks lurk around the company’s reliance on external foundational technologies. Should generative AI become as commonplace as operating systems, Apple may need to invest further through its own R&D or by acquiring established AI firms like Cohere, Mistral, or Anthropic. However, with a commitment to user-centric design and a focus on privacy, Apple’s current trajectory signals a potentially bright future in seamlessly incorporating AI capabilities that resonate with its customers.
By remaining patient and deliberate in its approach, Apple may not only catch up in the AI race but also redefine its identity within this crucial industry.