Apple may actually be winning the AI race

Subscribe to enjoy similar stories. Apple has emerged from the AI doghouse. The stock hit a new all-time high this past week after surging 39% since Aug.

1. The rally follows the botched rollout of Apple Intelligence, Apple’s effort to integrate artificial intelligence into its devices. The big piece of Apple Intelligence was supposed to be a new version of Apple’s digital personal assistant, Siri, that works like the top AI chatbots from OpenAI and Alphabet.

A smarter assistant is something Apple users have craved since Siri first arrived in 2011. But the project has been indefinitely delayed. The new Siri is proving to be difficult because Apple came into the AI race by handicapping itself.

It is the only Big Tech company that sees privacy and security as marketable features, not cost centers. Any implementation of the new Siri will need to meet Apple standards in this regard, and that is proving to be a big hurdle. Apple’s strong preference is for all machine learning to happen on encrypted Apple devices, leveraging special units in Apple’s chips.

Nothing is more private and secure. But the “frontier" language models that underlie ChatGPT and Gemini run in giant data centers, and are far too demanding for a phone. Much smaller models that can run on a phone don’t yet provide a consistently good enough user experience for Apple.

So we wait. Meanwhile, Wall Street seems to have moved on to a new narrative: It doesn’t matter if Apple is late to AI. While most of Big Tech is sprinting to an AI future, Apple is running a marathon.

Only time will tell who is right, but I share Apple’s long view of the AI boom. The company can take its time fitting AI into its products. So far, hundreds of billions in capital expenditures