AI Where It Matters: Why Apple Is Poised to Become the Invisible AI King

By Joey Frenette Published Apr 28, 10:30AM EDT

Quick Read

Apple (AAPL) is an emerging “invisible AI” player focused on practical consumer applications rather than competing for top AI benchmarks. Apple is pursuing a differentiated AI strategy through hyper-personalized features integrated across its ecosystem, building a moat that competitors will find difficult to replicate.
Apple may be betting that practical, integrated AI applications embedded throughout its ecosystem will generate better returns than the expensive pursuit of state-of-the-art models, allowing it to win with customers regardless of which company owns the top AI benchmark at any given moment.

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

AI Where It Matters: Why Apple Is Poised to Become the Invisible AI King — © 2024 Getty Images / Getty Images News via Getty Images

Apple (NASDAQ:AAPL | AAPL Price Prediction) may be viewed by some as far behind in the AI race, especially when you compare the current state of Siri and the likes of OpenAI’s ChatGPT or Anthropic’s Claude. With major updates in the cards for this year, the gap could close, perhaps entirely, as Apple brings out the best in Alphabet (NASDAQ:GOOG) Google’s Gemini, which will power Siri in the back half of the year.

A powerful, more useful, and highly personalized Siri may very well make Apple the AI play with all the monetization prospects with less of the upfront CapEx that’s pressuring much of the Mag Seven, including Google. And while the slow, steady approach might be the ultimate ROI move in the early days of AI, investors shouldn’t just think that the iPhone maker is just taking it easy as it rides on the backs of partners for AI.

There’s more to the AI boom than topping the benchmarks leaderboard

As more big-league spenders opt to pour hundreds of billions (or do whatever it takes) to achieve the most advanced model, there’s potential for commoditization. Indeed, today’s hottest and most capable model might not stay on the throne in a few months from now. Given the high entry price that comes with pushing for first, I’d argue that Apple is wise to take a different approach to the technology than its peers.

Not following the script of others might spare Apple stock from an AI bubble burst. But, more importantly, investing in more differentiated AI applications might allow Apple to post big wins behind the scenes. Instead of pushing the frontiers of models to outscore rivals in benchmarks, perhaps leveraging AI to be useful for everyday consumer applications is the way to go.

By prioritizing enriching the Apple ecosystem with “invisible AI” (think the AI that’s hard at work behind the scenes), I think Apple is becoming a stealth AI winner that’s quietly widening its moat while most other firms loudly push to become number one, even if it’s just for a moment, before another rival enters “code red,” pushing a model that’s even better shortly after.

Are the bragging rights of having that top model in the benchmarks really worth the massive investment?

While something like Claude Mythos, a powerful applied model that changes the game in cybersecurity, comes with a profound first-mover advantage, I do think that, for the most part, there’s a risk of not having as much to show for a temporary moment at the top of the AI rankings.

Of course, as agentics and highly applied AI come to be, the rewards for staying in that top spot could expand. I think Mythos gives us a glimpse of the kind of market-moving power that one model can have, as it shifts an entire industry.

Putting AI to work for consumers is what Apple does best

In any case, for Apple, it’s more of a consumer products firm, at least in my view. And as it stays within its circle of competence, by catering to its customers, I do think that it will win, regardless of whoever else occupies that top spot in AI at any given time. For now, Google Gemini is right up there with the best. And with the best coming to the Apple ecosystem, I do think the most substantial update (iOS 27) of all time is right around the corner.

As Apple focuses on how to utilize the power of AI beyond just chatbots (you can simply download an AI for that, or make use of the smarter Siri to come) in ways its customers aren’t, I do think Apple could become the king of “invisible AI,” especially as AI becomes hyper-personalized.

Whether it’s using AI to run things more efficiently in the background so that users can do more with less, leveling up already existing features (autocorrect), or having the smarts, context, and level of trust to allow agents to get the job done right and efficiently, I think Apple actually has a fairly sizeable moat surrounding its applied AI. As the applications grow and AI moves closer to the edge while Apple continues to improve its Neural Engine by leaps and bounds, I think Apple might be the invisible AI king that will be hard to dethrone.

In my view, Apple has the keys to the AI operating system. And it’s going to be really hard for any AI-capable firm to change that. In short, Apple’s running its own kind of AI race. As such, it doesn’t make a whole lot of sense to compare it directly to the AI model makers.

About the Author Joey Frenette →

Joey is a 24/7 Wall St. contributor and seasoned investment writer whose work can also be found in publications such as The Motley Fool and TipRanks. Holding a B.A.Sc in Computer Engineering from the University of British Columbia (UBC), Joey has leveraged his technical background to provide insightful stock analyses to readers.

Joey's investment philosophy is heavily influenced by Warren Buffett's value investing principles. As a dedicated Buffett disciple, Joey is committed to unearthing value in the tech sector and beyond.