There’s no denying it. Generative artificial intelligence is a game-changer. Even without knowing exactly how it will revolutionize the world when all is said and done, it seems this technology delivers the sort of solutions envisioned when computers first started becoming relatively common three decades ago. There’s a good reason so many tech companies are getting into the business.
Apple (NASDAQ: AAPL) is, of course, one of those companies.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
However, like every other name in this budding industry, Apple’s entry into the race is different than any other player’s. It’s also arguably better. Here’s how, and why it matters to investors.
First things first — what exactly is generative AI? To best understand what generative artificial intelligence is, it may be best to compare it to what it isn’t.
To date, computers have only done what software instructed them to do — no more and no less. And, of course, this software is just a compilation of thousands of coded instructions.
With the advent of generative artificial intelligence, though, computers can effectively make judgment calls in response to the often-arbitrary requests you make of platforms like ChatGPT or Microsoft’s Copilot. This can be anything from creating an image to writing a simple synopsis of a complex idea to analyzing data or even the creation of computer code that might otherwise be too time-consuming to piece together from scratch. Generative AI has even been used to create writing prompts or plot outlines for fiction stories.
There’s nothing much that’s actually artificial about what the world is calling artificial intelligence. Almost all AI platforms are just powered by a deep analysis of a massive amount of underlying data.
However, it looks, feels, and acts like the artificial intelligence often portrayed in science fiction films. Generative AI can make intuitive decisions meant to meet your specific needs or create something from nothing. That’s why Precedence Research believes the global generative artificial intelligence market is set to grow at an annualized pace of 44% through 2034, when it will be worth $1 trillion.
The question remains, though — what’s Apple doing on this front?
It’s called Apple Intelligence.
First announced in June and launched in October, Apple intends for its latest and future versions of its iPhones, iPads, and Mac computers to be true handheld generative AI devices capable of everything from creating custom images to summarizing emails to helping manage device owners’ schedules. More than an app, Apple Intelligence turns Apple’s hardware into true personal assistants by making owners more efficient and by doing so fluidly and intuitively.
As CEO Tim Cook explained during last month’s quarterly earnings call, “Apple Intelligence opens up an exciting new frontier and is already elevating experiences across iPhone, iPad, and Mac. We’re going to keep investing in innovation and in transformative tools that help users in their everyday lives.”
To this end, Apple’s ultimate goal is to sell more iPhones by making them an indispensable tool to consumers.
It’s not a stretch to suggest Apple is doing more on the consumer-facing generative AI front than any other name is, either. As The Motley Fool’s in-house research arm points out, Apple’s management has been tossing around the term “AI” during its recent earnings calls more than any other company in the business has since early last year. These other companies include Nvidia and Microsoft, which are certainly no slouches
Apple isn’t limiting the development of its artificial intelligence to tasks that can be handled directly from its devices, however. Although not just capable of supporting generative AI tasks, the company has been working on its own data center processor chips that appear to be intended to serve owners of Apple devices when they require more computing power and more data to analyze than their hardware is able to supply.
With this complementary approach, the company can offer its customers a complete, soup-to-nuts generative AI solution rather than relying on a bunch of third-party service providers with their own goals.
That’s the plan, anyway.
Just for the record, however, the company isn’t exactly knocking it out of the park yet. IPhone revenue for the quarter ended in December was essentially flat year over year, even though the iPhone 16 introduced in September is fully capable of supporting the processing-intensive Apple Intelligence platform. This tepidness extends to the long-standing stagnation of the popular smartphone’s revenue. Apple no longer discloses iPhone unit sales, but industry research outfit IDC also reports that the total number of iPhones shipping during the final quarter of last year actually fell 4.1% year over year while overall smartphone shipments grew by 2.4%.
Data sources: Apple Inc. and IDC. Revenue and unit data are both in millions.
Consumers clearly aren’t piling into new iPhones to plug into their artificial intelligence capabilities — at least not yet.
It’s too soon to throw in the towel here, however. There’s still a great deal of consumer education that needs to be done just to make the world aware of all the generative AI can do for them. As this work moves forward, don’t be surprised to eventually see Apple’s iPhone business perk up.
This, of course, will bolster the already bullish case for owning Apple stock.
Before you buy stock in Apple, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $765,024!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 3, 2025
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact legal@gsix.org
