Apple Intelligence: The Next Frontier in AI Development

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Right now, the world’s most powerful companies are in an all-out race to develop top-tier artificial intelligence. Titans like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta (META), Tesla (TSLA) and others have all put billions of dollars toward building their own AI technologies. But we think that ultimately, a notable laggard will win this race. So, who do we foresee taking the AI crown? Apple (AAPL).

Throughout all of 2023 and the first half of 2024, Apple was relatively quiet about its AI developments. While competitors like Microsoft made splashy, multi-billion-dollar investments into startups and announced new AI products and services, Apple didn’t do much… until a few weeks ago

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

And we believe this newly unveiled technology could transform the AI landscape.

What Is Apple Intelligence?

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

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

In other words, Apple isn’t trying to create AI that will help companies automate tasks, create better products or market more efficiently. It’s not working to help investment managers better manage risk in their portfolios. 

Instead, it’s focused on building AI that will help folks around the world do everyday things a bit more easily. And at scale, that could be hugely valuable. 

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

It would know everything about you. And it would be able to help you do almost anything. 

Having trouble picking a restaurant for date night? Not sure what movie you want to watch? Struggling to find new music you enjoy or not liking that email you just crafted? Let your Apple Intelligence help you. 

That is the future of AI.

Apple: Creating the Future of AI

Now, admittedly, Apple’s first steps into this foray are small. 

When it debuted Apple Intelligence, the company launched a few new features. 

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

Now, those are all cool developments – though they’re hardly landmark announcements. 

But do not interpret this present dearth 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 just a few weeks ago, Apple took the first step on its AI journey. 

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

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

The Final Word

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

Apple has all the personal data necessary to create profound, hyper-personalized AI. 

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

Indeed, AI is like a car. It needs a great engine and a lot of fuel, which in this case, is data. 

Apple has tons of fuel – but it doesn’t have a great engine. That’s where OpenAI comes into play. 

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

And just weeks ago, Apple confirmed that it’s working with the firm to natively integrate ChatGPT into the iPhone through Siri. 

Considering Apple’s other announcements, such as AI-powered content generation (which ChatGPT is really good at), it seems the company is using OpenAI’s models across its entire Apple Intelligence system. 

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

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

Regardless, Apple’s long-awaited entrance into the AI Race marks a huge moment for the industry. 

All of the world’s most important tech companies are now all-in with AI… 

Which means you should probably be all-in, too. 

Find out our favorite AI stocks to buy right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

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