November 30, 2022 and June 10, 2024. Those dates are probably insignificant to most of us, but they are incredibly important to the Tech world and its investors.
Why? Let’s start with November 30, 2022. This marks the date when ChatGPT was released to the public and arguably changed the Tech world forever. This “generative” artificial intelligence chatbot provided a real-world example of just how useful AI technology could be. From that moment, every company had to have a vision and business strategy that somehow incorporated AI. Any company that did not was perceived as falling behind.
It was easier for some than others. Nvidia, whose GPU chips are essential in making AI possible, was a clear winner. Microsoft, an investor and partner of OpenAI (the company behind ChatGPT), also emerged as a leader. Meta has been tinkering with AI for years and is using it to improve content curation and place ads on Facebook and Instagram. Google launched its own version of ChatGPT, “Google Gemini,” in late 2023. Amazon has AWS (Amazon Web Services), an industry-leading cloud computing platform that is AI-capable.
One major tech name appeared to be lagging behind, though—Apple. As time wore on, doubt grew, and investors became impatient. From ChatGPT’s debut in 2022 until the beginning of June 2024, the stock of every other company mentioned above increased by 70% or more. Apple’s stock rose by less than half of that. It was clear investors felt like they were in the dark.
Things changed on June 10, 2024. Exactly 558 days after ChatGPT kickstarted the frenzy in AI, Apple finally unveiled “Apple Intelligence” and outlined its plan to integrate it into the Apple ecosystem. With a user base of over 1 billion iPhones, the sheer scale of the rollout (in Autumn 2024) could be another pivotal moment for AI. Not only will it reach large percentage of all smartphone users, its features will be practical enough for everyday use. For example, instead of yelling at Siri and hoping it understands a basic command, you will now be able to speak normally to a ‘Smarter Siri’ and it will understand you along with the context of what you are saying. Need to reschedule a meeting? Just ask (or type) the new Siri to reschedule it, taking into account traffic and your existing calendar. Need to find a picture from a few years ago? Just describe it to Siri and voila! These are just two examples of new features that are expected to reduce the ‘friction’ of daily life. ChatGPT was an AI triumph that organized all the information on the internet. Apple Intelligence could be an AI triumph that will organize all the information about you.
What does all of this mean for investors? The first thing to note is that Apple will be offering Apple Intelligence for free. The catch is that you will need an iPhone 15 (or later). As a result, these enhanced capabilities could spur an iPhone upgrade cycle. This would be a major win for Apple as the upgrade cycle has slowed in recent years.
There is some optimism that this will be the case. At the end of May, Apple's stock price hadn’t budged from the beginning of 2024. Meanwhile, Nvidia was +120%, Meta was +32%, Google was +23%, and Microsoft was +10% in 2024. Since Apple’s AI announcement, however, the stock has seemingly jumped back to life, rejoining the solid uptrend seen in the other Big Tech names. To be clear, this isn’t the explosive move we’ve seen in Nvidia stock. But Apple’s approach might be more relevant in everyday life. The next step in the Artificial Intelligence story may be that its usefulness (at least in the near-term) is somewhat mundane. Texting, photos, email, scheduling—things we already do on our iPhones—will become faster, easier, and more intuitive so that we can dedicate more time to other areas our lives. Gains in personal efficiency across a large swath of people could have a real-world impact.
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