Apple has announced a partnership with OpenAI, the developer of ChatGPT, as part of its artificial intelligence strategy. The company is looking to bring competition to its devices by exploring deals with AI startups like Anthropic and Perplexity. This move could help Apple reduce its reliance on Microsoft and Google for AI technology.
Google currently pays Apple billions of dollars annually to be the default search engine on iPhones and Safari browsers. However, Apple is not looking to replicate this model with AI providers. Instead, they plan to allow these companies to sell premium subscriptions and take a portion of the revenue generated through Apple devices, potentially avoiding any disruption to their lucrative App Store.
Analyst Daniel Ives from Wedbush believes that developers will create hundreds of AI-powered generative applications in the next 6 to 12 months, contributing to Apple’s success. Ives has an optimistic outlook on Apple’s future, with an Outperform rating and a $275 price target, the highest on Wall Street.
However, Apple is facing criticism for not being open enough with its current business practices. The European Union recently accused Apple of violating digital competition laws with its App Store policies that restrict developers from directing customers to alternative purchase methods. If found guilty, Apple could face fines of up to 10% of its global revenue under the EU Digital Markets Act.
Apple has made changes in response to these allegations but maintains that its current practices comply with the law. Despite these challenges, Apple’s shares remained steady in premarket trading.
In summary, Apple’s AI strategy is expanding with partnerships and deals with AI companies to enhance its ecosystem. While facing regulatory scrutiny and accusations of anti-competitive behavior, the company remains confident in its compliance with the law. The future of Apple’s AI-driven applications looks promising, and analysts are optimistic about the company’s growth potential.
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https://www.barrons.com/amp/articles/apple-stock-meta-microsoft-google-ai-4ca8b0f8
