Apple’s bold AI bet may be its only hope

The Street

Here’s why partnering with Anthropic or OpenAI might be Apple’s saving grace.

Transcript

00:00We have Apple reportedly weighing using Anthropic or OpenAI to power Siri.

00:07What are your thoughts on that? Is that a mistake?

00:09I don't think so because they're so behind in AI.

00:13I think it's tricky because Apple is the type of company that's very hidden

00:17about what they're actually working on behind the scenes.

00:20So a lot of finger in the air, like wherever it's blowing.

00:22But I think we got signs this week that they're actually significantly behind

00:25on the internal foundational model.

00:27And they can't afford to do so.

00:30When you see Meta Zuckerberg, he's willing to bet $20 billion on a shadow aqua hire

00:35on Alexander Wang through Scale AI just to get him under the roof,

00:40spending $100 million signing bonuses for a super intelligence team.

00:45It's vital for these hyperscalers to be a massive player in this AI race

00:51because if they're not, they're missing on the biggest movement

00:54in honestly mankind's history, which is AI.

00:57And I think that people are scuffing about Meta, for example,

01:00spending $100 million per FTE.

01:03But think about it.

01:04Back in the math, they're a $2 billion company.

01:06If they miss this AI race, I think conservatively,

01:10it's going to be a 25% haircut.

01:12So that's a $500 billion of risk.

01:15Spending a couple hundred million on AI brain talent to come in-house

01:18to make sure they are maintaining their lead or competitive edge

01:22in this AI race is nothing.

01:23To go back to your point on Apple, I don't think AI talent wants to work there.

01:29I think they are working at XAI.

01:31They're working at Meta.

01:32So I think Apple doesn't have the talent to create their internal foundational model,

01:36so they have to partner up.

01:37And I think the next derivative of Apple's innovation isn't going to be a Siri.

01:44It's going to be humanoid robots.

01:46It makes too much sense.

01:48That's the next hardware evolution in society.

01:51And everyone has...

01:52I have an AirPods.

01:53I have an iPhone.

01:54I have Apple TV.

01:55Everyone has so many Apple devices in their home.

01:58It makes too much sense for them to have an Apple humanoid robot to pair up with that.

02:01So you're not concerned about them losing their competitive edge

02:05because you think they might be developing something even greater than Siri.

02:10So I do believe they're losing their competitive edge.

02:13I don't think they'll ever be a growth company anymore.

02:16I think they're showing signs of just being...

02:19They've put so much cash.

02:20They're a financial engineering firm at the end of the day, in my opinion.

02:23Buybacks, dividends, etc.

02:25That they don't care about controlling the stack anymore

02:29because they don't have the ability to do so.

02:32They want to.

02:33They want to kind of be able to have their own models,

02:36have their own training data.

02:38They just don't have the capability to do that.

02:39And that's the risk of Apple falling even more behind.

02:42They have to pivot.

02:43And that's the quickest pivot.

02:44So Apple's 20% off the highs.

02:47Would you buy there?

02:48I would not.

02:49I think...

02:49I've seen zero signs of innovation in the past decade.

02:52They spent $10 billion on an Apple car

02:54that was just in prototype phase.

02:58Their Apple iPhone has not innovated who knows how long.

03:01They're focusing on the old hardware world.

03:05The next hardware world isn't going to be scrolling,

03:09doing iOS updates.

03:10Oh, that looks clean.

03:11It's not going to be that stuff.

03:12It's going to be...

03:13Intelligence has verbalized.

03:14It's going to take feedback loops.

03:17Open AI is pairing up a talented creator

03:21on who disrupted the smartphone space

03:24to create magic behind a box.

03:25They have them in-house now.

03:27So I think that the future devices in society

03:30isn't going to be something as manual

03:31as using your fingers.

03:32It's going to be feedback loops

03:34where I'm wearing some device.

03:36AI is instantly telling me what's happening

03:38and what to do about it.

03:40It's going to be all just in the world environment.

03:42It's not going to be as tangible as using your hands.

03:45And every time I see some innovation on Apple,

03:48it's just, okay, that's a nice makeup,

03:51but it's not disruptive of where the world's heading.

03:53AI is on the edge of an off-site.

03:53So we'll get ready.

03:54Okay.

03:56Okay.

03:56So I'll go through.

04:00I'll go through.

04:00Ready?

04:01Okay.

04:01Yeah.

04:02Okay.

04:04Emily.

04:05Okay.

04:06All�.

04:07Yeah.

04:08I'll take a moment

04:12for me.

04:14I was working here for you,

04:15right?

04:15All�.

04:16Okay.

04:17Best of you.

04:17I got a lot.

04:18Okay.

04:19Hold me.

04:19All my purpose.

04:19Okay.

04:20All right.

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