Apple Unveils AI Strategy with New Siri and ChatGPT Features, But Investors Remain Unimpressed

Apple (NASDAQ: AAPL) has recently rolled out a highly anticipated AI strategy, infusing its suite of applications with the new "Apple Intelligence" technology and incorporating OpenAI's ChatGPT into its devices. In an almost two-hour-long presentation at Apple's annual developer conference, various executives, including CEO Tim Cook, shared how voice assistant Siri will now engage with messages, emails, calendars, and even third-party applications. Siri's revamped capabilities will include composing emails and altering tone to fit different contexts—a nod to Apple's long-standing emphasis on user privacy.

Despite the fanfare, Wall Street was left wanting more. Investors, seeking more standout AI features and reassurances that Apple could rival Microsoft's (NASDAQ: MSFT) market-leading position in AI, were less than enthusiastic. Apple's stock closed down nearly 2%, reflecting a muted response to the announcements. While Apple’s (NASDAQ: AAPL) stock saw a 13% gain in anticipation of the event, some analysts felt the unveiling fell short of groundbreaking.

Forrester's analyst, Dipanjan Chatterjee, summed it up by saying, "There isn't anything here that propels the brand ahead of its as-expected trajectory of incrementalism." Although the new Apple Intelligence will offer small but meaningful enhancements, it doesn't elevate Apple above its competitors, he noted.

Paolo Pescatore, founder of PP Foresight, voiced his opinion that Alphabet (NASDAQ: GOOGL) and Microsoft appeared to be in better positions in the early stages of the AI race, thanks largely to their cloud computing assets.

The revamped Siri will now have enhanced control, needed to carry out tasks that were previously tricky due to the assistant's requirement to understand the user's intent and app functionality. Siri will leverage ChatGPT’s expertise, seeking user consent before querying the OpenAI service—a privacy feature that Apple highlighted. This partnership, however, did raise immediate questions about privacy. Tesla (NASDAQ: TSLA) CEO Elon Musk even suggested on X that he might consider banning Apple devices within his companies if the iPhone maker integrates OpenAI’s tech at the OS level.

Apple indicated that the ChatGPT integration would launch later in the year, with other AI features to follow. They assured users that accessing the chatbot would be free, and that user's information wouldn't be logged. The company later published a paper detailing how these features would protect customer data, introducing a new offering called Private Cloud Compute to handle more complex tasks on Apple’s servers.

Looking ahead, Apple also plans to integrate technologies from other AI companies into its devices, amid ongoing discussions about a potential collaboration with long-time search partner Google. Apple's preference for in-house data processing over cloud services is aimed at bolstering user privacy, especially with upcoming in-house chips packed with security features used in data centers. This move could also help Apple curb expenses on NVIDIA (NASDAQ: NVDA)’s costly chips.

The new iOS 18 will make the iPhone home screen more customizable and introduce a "lock an app" feature to better protect sensitive data. Additionally, Apple announced that its mixed-reality headset, Vision Pro, will soon be available in eight more countries, including China and Japan.