Just How Important Is AI for Apple's Future?
When it comes to artificial intelligence (AI), Apple (NASDAQ: AAPL) does not seem to attract as much attention as its mega-tech counterparts. It does not promote AI to the same extent as Google-parent Alphabet. And unlike Microsoft, it has not built a partnership with ChatGPT developer OpenAI.
Nonetheless, even if it does not necessarily call its features AI, Apple plays a prominent role in the field and will likely continue to do so. A closer look reveals the depth to which Apple's products and services rely on AI.
The products and services
Indeed, one could describe all of Apple's current products as AI tools. The iPhone, which accounts for the majority of Apple's revenue, is the company's most prominent AI device.
Unsurprisingly, much of its AI revolves around language, applying machine learning (ML), a subset of AI, for systems to develop their intelligence. It first incorporated AI into the iPhone in 2011 when it introduced Siri. The speech-based personal assistant relies on AI to recognize and process requests and accurately deliver the requested results in a clear and recognizable voice.
In subsequent years, the company has developed numerous ML application programming interfaces (APIs) usable across all its devices related to vision, sound, natural language, and speech.
Its Core ML app integrates prebuilt ML features into other apps. It runs and personalizes models using advanced neural networks and performs those tasks with minimal memory and power consumption. Likewise, Create ML can train Core ML models on a Mac. Given such offerings, AI and ML undoubtedly help Apple bring added functionality to its products as it makes continual updates.
Apple's AI research
An essential part of that advancement is research. As of its fiscal 2023's second quarter (ended April 1), Apple held approximately $177 billion in liquidity. In light of the optionality its assets provide, the company spent more than $15 billion on research and development in the first six months of fiscal 2023. That was a 20% increase from the same period a year ago, and AI likely claimed much of that spending.
Like its mega-tech peers, Apple employs numerous developers and researchers in the AI field. In this endeavor, AI workers on the hardware and software sides of the business build new experiences in all Apple products. Separate groups specializing in ML infrastructure, deep learning, natural language processing, computer vision, and applied research work together to develop this added functionality.
Still, Apple's most important work may come from its investments in the future of AI, and its focus on academia shows this commitment. The company developed a program called Apple Scholars, offering fellowships to Ph.D. students who pursue the latest ML and AI at many of the world's top universities.
Apple also builds on this academic research through its AIML Residency Program. It brings together experts across numerous fields, applying their theoretical knowledge to create products and experiences powered by AI and ML.
To this end, the company also mentors these residents, sends them to AI- and ML-related conferences, and creates opportunities for them to publish their work. Such investments maintain a long-term research and development pipeline, amounting to a sustained competitive advantage in these fields.
Making sense of Apple AI
Given the level of dependence that Apple's products have on AI, the technology is obviously of tremendous importance to the company. Admittedly, it has not always marketed its innovations as AI. Nonetheless, many advancements in its latest product iterations center on the technology.
Moreover, its considerable work on the academic side deepens its research and development pipeline. Not only does that make Apple one of the most essential AI stocks, but it should also remain so for a long time to come.
10 stocks we like better than Apple
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of May 8, 2023
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. The Motley Fool has a disclosure policy.
