Apple Inc. is at a pivotal juncture with its artificial intelligence initiative, Apple Intelligence. Investment firm TD Cowen has projected that Apple has until the end of 2026 to make Apple Intelligence a compelling feature for consumers. This timeline suggests that Apple has approximately 18 months to refine and enhance its AI capabilities to meet market expectations.
Current Market Position and Challenges
In the rapidly evolving tech landscape, artificial intelligence has become a cornerstone of innovation. Competitors like Google and Microsoft have made significant strides in integrating AI into their products and services, setting high standards for user experience and functionality. Apple’s introduction of Apple Intelligence was a strategic move to stay competitive; however, the initial rollout has faced challenges.
Reports indicate that the overhauled Siri, powered by Apple Intelligence, has encountered delays. Initially slated for release with iOS 18, the advanced features required more development time due to their complexity and privacy requirements. As a result, the updated Siri is now expected to launch alongside iOS 19 in Fall 2025. These enhancements include personal context awareness, onscreen content recognition, and deeper app integration. Apple has acknowledged the delay, citing the challenge of reliably integrating sensitive, personal data while adhering to its privacy-first philosophy. The updated Siri will include capabilities like recalling information from emails and messages, recognizing visual content on-screen, and performing multi-app tasks. These improvements will be limited to newer devices, including iPhone 15 Pro, iPhone 16 series, and the forthcoming iPhone 17 models. While prior marketing efforts showcased Siri’s new tools prematurely, Apple has since clarified that these features are still in development. The company remains committed to local, on-device AI processing to maintain user data privacy. Despite the setbacks, the upcoming fall release holds promise for a significantly more intelligent and useful Siri experience.
Strategic Implications
The delay in rolling out Apple Intelligence features has broader implications for Apple’s market strategy. The staggered release schedule could affect the annual surge in iPhone sales critical to Apple’s business and its suppliers. Competing tech companies are already ahead in AI strategies, making Apple’s slower rollout potentially disadvantageous. Meanwhile, Apple must focus on hardware enhancements like a faster processor, larger screens, improved camera control, and better battery life to attract buyers. The EU has also imposed significant fines on Apple and Google for tax and market competition violations, respectively.
Investor Outlook
Despite these challenges, TD Cowen maintains a positive outlook on Apple’s stock, recommending that investors buy shares. The firm has set a target price of $275, reflecting confidence in Apple’s ability to navigate these hurdles and capitalize on future opportunities. This optimism is partly based on expectations of moderate earnings growth and the anticipated launch of folding devices, which could open new market segments for Apple.
The Road Ahead
Apple’s commitment to enhancing Apple Intelligence is evident in its ongoing development efforts. The company has opened its large language models to third-party developers and reportedly allowed internal use of external AI models to enhance Apple Intelligence. While it remains unclear whether Siri will evolve into a chatbot like ChatGPT, Apple insists it aims to “meet people where they are” rather than build a typical chatbot. A preview may arrive in Fall 2025, aligning with the iPhone 17 launch.
Furthermore, Apple has been expanding its artificial intelligence team and increasing transparency in its AI operations. The company started expanding its artificial intelligence team in 2015, opening up its operations by publishing more scientific papers and joining AI industry research groups. Apple reportedly acquired more AI companies from 2016 to 2020. In 2017, Apple released the iPhone 8 and the iPhone X with the A11 Bionic processor, which featured its first dedicated Neural Engine for accelerating common machine learning tasks. Despite its investments in artificial intelligence, Siri was criticized both by reviewers and internally at Apple for lagging behind other AI assistants.
The rapid development of generative artificial intelligence and the release of ChatGPT in late 2022 reportedly blindsided Apple executives and forced the company to refocus its efforts on AI. In an interview with Good Morning America, Apple CEO Tim Cook stated that generative AI had great promise but had some potential dangers, and that it was looking closely at ChatGPT. It was first reported in July 2023 that Apple was creating its own internal large language model, codenamed Ajax. In October 2023, Apple was reportedly on track to release new generative AI features into its operating systems by 2024, including a significantly redeveloped Siri. In an earnings call in February 2024, Cook stated that the company was spending a tremendous amount of time and effort into AI features that would be shared later that year.
Conclusion
Apple’s journey with Apple Intelligence is a testament to the complexities of integrating advanced AI into consumer products. The next 18 months are critical for the company to address current challenges, enhance its AI offerings, and solidify its position in the competitive tech landscape. Success in this endeavor will not only meet investor expectations but also redefine user experiences across Apple’s ecosystem.
