Apple Intelligence: The next frontier in AI development

VaselineAugust 24, 2024

0 4 minutes read

Editor’s note: “Apple Intelligence: The Next Frontier in AI Development” was previously published in August 2024. It has since been updated to include the most relevant information available.

Right now, the world’s most powerful companies are in an all-out race to develop top-notch artificial intelligence. Titans like it Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGLE), Meta (THE TARGET), adze (TSLA) and others have all invested billions of dollars in building their own AI technologies. But we think a notable latecomer will ultimately win this race. So who do we predict will take the AI crown? Apple (AAPL).

Throughout 2023 and the first half of 2024, Apple has been relatively quiet about its AI developments. While competitors like Microsoft have made spectacular, multibillion-dollar investments in startups and announced new AI products and services, Apple hasn’t done much… until the beginning of this summer.

At its annual Worldwide Developers Conference (WWDC) on June 13, Apple presented Apple Intelligence – its brand new proprietary AI ecosystem.

And we think this newly revealed technology could transform the AI landscape.

What is Apple Intelligence?

At its core, Apple Intelligence is centered around hyper-personalized AI.

Specifically, Apple is trying to turn its iPhone into a hyper-personalized AI assistant. Think JARVIS from Iron Man – a powerful system that understands and responds to human speech, recognizes voices, quickly analyzes data to aid research and decision making. That’s what Apple Intelligence is all about.

In other words, Apple isn’t trying to create AI that helps companies automate tasks, create better products, or market more effectively. It does not work to help investment managers better manage the risks in their portfolios.

Instead, they’re focused on building AI that will help people around the world make everyday things a little easier. And at scale, that could be hugely valuable.

Imagine your iPhone equipped with a personalized AI model, tailored specifically to your wants and needs. It would know your favorite restaurants, what sports you watch, what news you read, how you create emails and texts, what music you listen to, what shows you watch.

They would know everything about you. And it could help you do almost anything.

Having trouble choosing a restaurant for a date night? Not sure what movie you want to watch? Struggling to find new music you like or dislike that email you just created? Let your Apple Intelligence help you.

This is the future of AI.

Apple: Creating the Future of AI

Now, of course, Apple’s first steps in this foray are small.

When it launched Apple Intelligence, the company rolled out some new features.

For starters, Siri is getting a major update and will be able to pull data to perform cross-app actions (like taking a dinner reservation you discussed in an iMessage conversation and adding it to your calendar). Apple also announced a number of AI-based content generation tools, such as Genmoji (where you can use AI to create your own emoji). And it revealed an upcoming integration with ChatGPT for all iPhones.

Now, these are all exciting developments – although not groundbreaking announcements.

But don’t interpret this current lack as Apple being unable to compete in the AI race.

After all, as the old saying goes, the journey of a thousand miles begins with a single step.

And this summer, Apple took the first step in its AI journey.

It will take many, many steps in the coming months.

And we believe that when the journey is over, Apple Intelligence will become the most transformative AI on the planet.

The Final Word

Just think of all the data your iPhone collects every day — your music streams, YouTube views, news feeds, messages.

Apple has all the personal data it needs to create deep, hyper-personalized AI.

But when it comes to creating great AI, data is only half the equation.

Indeed, AI is like a machine. It needs a great engine and plenty of fuel, which in this case are givens.

Apple has tons of fuel — but no great engine. This is where OpenAI comes in.

The company behind ChatGPT has arguably the biggest AI models in the world – the best “engines” in the AI race.

And Apple recently confirmed that it’s working with the firm to integrate ChatGPT natively into the iPhone via Siri.

Given Apple’s other announcements, such as AI-based content generation (which ChatGPT is very good at), it appears the company is using OpenAI models throughout its Apple Intelligence system.

With Apple data and OpenAI’s AI models, Apple Intelligence is equipped with the biggest fuel and best engine in the AI race.

That’s exactly why we believe that Apple Intelligence could, over time, become the best AI in the world.

In fact, we think that next month, on September 10, 2024, Apple could unveil a game-changing iteration of the iPhone — its first AI device.

Although, with a market cap of nearly $3.3 trillion, AAPL stock isn’t the way to play this transformational debut. Instead, we’ve set our sights on the company’s smaller suppliers, which offer much greater growth potential.

Discover the most profitable ways to play this titanic debut.

_{As of the date of publication, Luke Lango did not hold (either directly or indirectly) any position in the securities mentioned in this article.}

PS You can stay up to date with Luke’s latest market analysis by reading our daily notes! Check out the latest issue on your Investor in innovation or Early stage investor the subscriber’s website.

VaselineAugust 24, 2024

0 4 minutes read

Vaseline

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