Apple may need to acquire AI firms to boost Apple Intelligence

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Financial firm Wedbush believes that WWDC practically demonstrates how Apple is executing its Apple Intelligence strategy, but without significant progress it may be forced into large scale AI acquisitions.

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Most investment and financial firms were underwhelmed by Apple's WWDC 2025 keynote, and that includes Wedbush. But in a note to investors seen by AppleInsider, Daniel Ives at Wedbush says that Apple did lay out its vision for AI, and it has begun to execute that with it opening up Apple Intelligence to third-party developers.

The analyst argues that Apple chose to play things safe, and even low-key, following what it and others describe as the missteps of WWDC 2024. Yet while that strategy is supportable and maybe even necessary, Ives maintains that the following 12 months are critical for Apple Intelligence.

Specifically, he reasons that progress in Apple Intelligence will be the focus of investors during that next year, so the company has only a short time to impress them. He says that this time pressure could prompt Apple to make bigger AI Acquisitions than the many small ones it already has.

Apple has always acquired very many companies each year, but only reveals this when required to because of the size of the deal. The company may have made many more AI acquisitions than known, then, but so far it's been reported to buy such firms for calendar features, and manufacturing.

There is no indication of what further AI acquisitions might satisfy the analysts's expectation, but Ives says that Wedbush is highly confident that Apple can do it well. He says that WWDC 2025 may have lacked the same AI push that 2024's event did, but that it also set the stage for significant improvements to come.

Consequently, Wedbush is retaining its $270 price target.

The company raised that target to $270 in May 2025. At the time, this was less about Apple Intelligence, and more on Apple's ability to mitigate global disruptions such as Trump's tariffs.



Read on AppleInsider

Comments

  • Reply 1 of 17
    AppleZuluapplezulu Posts: 2,534member
    I agree that Apple’s early AI announcements were probably a misstep, a rushed effort to plant a flag amidst all the AI hype. 

    I also think their course correction and current stance of waiting until they get it right is a return to core values. If they do acquire other AI firms, it’s not going to be out of hurried panic, but because an acquisition brings something that helps the goal of getting it right. 

    I suspect this year is likely to bring pratfalls and face plants from some of the other leading purveyors of AI, because there is an AI bubble, including a huge real-world feedback loop of AI hallucinations and bad information that the current LLM AI models have created for themselves. Their AI is going to get worse, not better, and there will be a threshold where even regular consumers will realize it. 

    If Apple then arrives with a more focused and reliable system, we’ll see history repeat itself once again. 
    hmurchison
     1Like 0Dislikes 0Informatives
  • Reply 2 of 17
    avon b7avon b7 Posts: 8,327member
    AppleZulu said:
    I agree that Apple’s early AI announcements were probably a misstep, a rushed effort to plant a flag amidst all the AI hype. 

    I also think their course correction and current stance of waiting until they get it right is a return to core values. If they do acquire other AI firms, it’s not going to be out of hurried panic, but because an acquisition brings something that helps the goal of getting it right. 

    I suspect this year is likely to bring pratfalls and face plants from some of the other leading purveyors of AI, because there is an AI bubble, including a huge real-world feedback loop of AI hallucinations and bad information that the current LLM AI models have created for themselves. Their AI is going to get worse, not better, and there will be a threshold where even regular consumers will realize it. 

    If Apple then arrives with a more focused and reliable system, we’ll see history repeat itself once again. 
    AI will get better. Not worse. 

    It is important to remember that generative AI 'hallucinates' by design not only as some weird by-product.

    Methods are being used to make hallucinating less of an issue. Not that it is, even now, for people who understand the limits of AI today.

    We can still do things today that were unimaginable just a couple of years ago so it's key not to flag the moments AI 'fails' but to appreciate the benefits it brings most of the time.

    If it weren't proving successful, people would have pulled away already. They haven't. 

    In 2023, Apple deliberately chose not to even utter the letters 'AI' at WWDC2023.

    In hindsight that was a mistake as it brought more questions than answers. 

    In 2024, and amidst the start of the Gen AI boom, Apple chose to make a meal out of AI. In hindsight that was probably an error too but understandable at least.

    In 2025, people are again asking questions and the answers aren't very convincing. The pressure is really on now (both internally and externally). 

    2026 looks like being a crunch year for a few reasons. 

    Acquisitions are fine but nothing they purchase today can just be patched into its systems in real time and major acquisitions are obviously going to make things look worse from a strategic perspective. That makes 2026 an important year.

    However, things are moving so incredibly fast right now that it is hard to predict where things might be even at Christmas this year. That applies to everyone but if you have a shipping product to 'sell' at least you're on the train. 

    It's not hard to imagine Apple still struggling in 2026. We know (with some guesswork sprinkled in) that Apple has had important management issues that have led to delays. Siri (and everything that hangs off it) is a classic example. 

    I think Apple is just spread too thin at the moment. An acquisition might ease that situation. Just like the Intel modem acquisition brought in a thousand engineers and the project reached the market.

    Apple is unlikely to arrive with a more reliable system because competing systems already exist and are moving ahead. 

    That said, I never put much into what financial analysts say. 
    muthuk_vanalingamStrangeDays
     1Like 1Dislike 0Informatives
  • Reply 3 of 17
    hmurchisonhmurchison Posts: 12,464member
    There's a problem with the Top Brass at Apple.   They are being way too soft. 

    When nobody investor firms are squawking about "pie in the sky" futures with AI 

    You need a leader at the top that tells it like it is.   Businesses are looking to leverage 

    AI and most of the companies with heavy financial expenditure in AI have big 

    business in mind.   Apple is primarily focused on the residential sector and this sector 

    will always trail businesses' needs with scaled down and simplified product and service 

    selections.   Apple doesn't need to acquire any large firms they just need to clean up 

    their business processes and realize that their marketing message and company behavior 

    has been weak and tepid.  They have lost the edge that Jobs worked hard to bring to Apple 

    because Tim Cook is not that guy.  
    williamlondon
     0Likes 1Dislike 0Informatives
  • Reply 4 of 17
    blastdoorblastdoor Posts: 3,845member
    Typically the point of an acquisition is to gain technology, productive assets (like factories), employees, or customers. But I don't see Apple as falling short in any of those areas. 

    Apple's problem really is with their senior management's failure of vision and strategy. Either senior management needs to self-correct or the board will have to get involved. 
    williamlondondanox
     1Like 1Dislike 0Informatives
  • Reply 5 of 17
    There were a lot of news that Apple bought AI startups more than any others. Where are they? What are they? Are they already integrated? 

    Embarrassing moment for Apple so far. They need to work on Siri and perfect it. But the time is ticking. Even if it is hard to master until 2026, the world expects to have it in 2026 as they literally confirmed 2026 as their target. 

    Rotten Apple.
    danoxwilliamlondonmuthuk_vanalingam
     0Likes 3Dislikes 0Informatives
  • Reply 6 of 17
    danoxdanox Posts: 3,887member
    Laughable this is the typical Wall Street MBA solution. Go try and buy your way in (movie studio, gaming company) there are no shortcuts in chip hardware or software development, even if you found the right AI company (there isn’t one) today and if you could buy them next month. It will take years of work to even get to first base at this moment, who has a AI solution that the public is willing to use that actually makes a actual profit upfront right now in this new world of AI? Answer no one.

    Apple was right in not giving OpenAI or anyone else billions of dollars for AI software, which is currently a work in progress …..
    edited June 16
    StrangeDaysneoncat
     1Like 1Dislike 0Informatives
  • Reply 7 of 17
    blastdoor said:
    Typically the point of an acquisition is to gain technology, productive assets (like factories), employees, or customers. But I don't see Apple as falling short in any of those areas. 

    Apple's problem really is with their senior management's failure of vision and strategy. Either senior management needs to self-correct or the board will have to get involved. 
    Apple is not a technology company. The technology plays in the background. Apple is a design company. If you compare executives from other corporates with Apple, you will notice that literally all of Apple‘s executives are older than any other pe. 

    John Ternus is the youngest and maybe the only one who is young on comparison to other companies.
    williamlondonStrangeDaysblastdoor
     0Likes 3Dislikes 0Informatives
  • Reply 8 of 17
    danoxdanox Posts: 3,887member
    blastdoor said:
    Typically the point of an acquisition is to gain technology, productive assets (like factories), employees, or customers. But I don't see Apple as falling short in any of those areas. 

    Apple's problem really is with their senior management's failure of vision and strategy. Either senior management needs to self-correct or the board will have to get involved. 
    Apple is not a technology company. The technology plays in the background. Apple is a design company. If you compare executives from other corporates with Apple, you will notice that literally all of Apple‘s executives are older than any other pe. 

    John Ternus is the youngest and maybe the only one who is young on comparison to other companies.

    Apple is basically the last vertical computer company left from the 1980s, Apple, not being a tech company would be news to some of their competitors particularly Microsoft, Intel, AMD, Nvidia and Qualcomm.

    https://en.wikipedia.org/wiki/Apple_silicon

    https://en.wikipedia.org/wiki/MacOS

    edited June 16
    StrangeDaysneoncatblastdoor
     2Likes 1Dislike 0Informatives
  • Reply 9 of 17
    danox said:
    blastdoor said:
    Typically the point of an acquisition is to gain technology, productive assets (like factories), employees, or customers. But I don't see Apple as falling short in any of those areas. 

    Apple's problem really is with their senior management's failure of vision and strategy. Either senior management needs to self-correct or the board will have to get involved. 
    Apple is not a technology company. The technology plays in the background. Apple is a design company. If you compare executives from other corporates with Apple, you will notice that literally all of Apple‘s executives are older than any other pe. 

    John Ternus is the youngest and maybe the only one who is young on comparison to other companies.

    Apple is basically the last vertical computer company left from the 1980s, Apple, not being a tech company would be news to some of their competitors particularly Microsoft, Intel, AMD, Nvidia and Qualcomm.

    https://en.wikipedia.org/wiki/Apple_silicon

    https://en.wikipedia.org/wiki/MacOS


    According to K-10 filing, Apple describes themselves as a design company. Apple designs, manufactures, and markets etc. 

    So. I have always considered Apple Silicon as their own design IP. Somehow, you are also right, that is is a vertical company. 

    williamlondon
     0Likes 1Dislike 0Informatives
  • Reply 10 of 17
    danoxdanox Posts: 3,887member
    danox said:
    blastdoor said:
    Typically the point of an acquisition is to gain technology, productive assets (like factories), employees, or customers. But I don't see Apple as falling short in any of those areas. 

    Apple's problem really is with their senior management's failure of vision and strategy. Either senior management needs to self-correct or the board will have to get involved. 
    Apple is not a technology company. The technology plays in the background. Apple is a design company. If you compare executives from other corporates with Apple, you will notice that literally all of Apple‘s executives are older than any other pe. 

    John Ternus is the youngest and maybe the only one who is young on comparison to other companies.

    Apple is basically the last vertical computer company left from the 1980s, Apple, not being a tech company would be news to some of their competitors particularly Microsoft, Intel, AMD, Nvidia and Qualcomm.

    https://en.wikipedia.org/wiki/Apple_silicon

    https://en.wikipedia.org/wiki/MacOS


    According to K-10 filing, Apple describes themselves as a design company. Apple designs, manufactures, and markets etc. 

    So. I have always considered Apple Silicon as their own design IP. Somehow, you are also right, that is is a vertical company. 


    One other area that has become very important that didn’t exist in earlier years was the creation of the Apple retail stores in combination with Apples online store selling Apples products directly, Apple would still be at the mercy of third party retailers and that experience is pretty much the same as their current experience with AAA game companies your market isn’t big enough Apple.



    edited June 16
    neoncat
     0Likes 1Dislike 0Informatives
  • Reply 11 of 17
    danvmdanvm Posts: 1,506member
    danox said:
    Laughable this is the typical Wall Street MBA solution. Go try and buy your way in (movie studio, gaming company) there are no shortcuts in chip hardware or software development, even if you found the right AI company (there isn’t one) today and if you could buy them next month. It will take years of work to even get to first base at this moment, who has a AI solution that the public is willing to use that actually makes a actual profit upfront right now in this new world of AI? Answer no one.

    Apple was right in not giving OpenAI or anyone else billions of dollars for AI software, which is currently a work in progress …..
    Apple didn't gave OpenAI billons of dollars but gave access to billions of customers.  In this agreement, I think OpenAI won.  
     0Likes 0Dislikes 0Informatives
  • Reply 12 of 17
    danoxdanox Posts: 3,887member
    danvm said:
    danox said:
    Laughable this is the typical Wall Street MBA solution. Go try and buy your way in (movie studio, gaming company) there are no shortcuts in chip hardware or software development, even if you found the right AI company (there isn’t one) today and if you could buy them next month. It will take years of work to even get to first base at this moment, who has a AI solution that the public is willing to use that actually makes a actual profit upfront right now in this new world of AI? Answer no one.

    Apple was right in not giving OpenAI or anyone else billions of dollars for AI software, which is currently a work in progress …..
    Apple didn't gave OpenAI billons of dollars but gave access to billions of customers.  In this agreement, I think OpenAI won.  

    They didn’t win anything you seemed to forget that Apple in the Apple Intelligence presentation at last year‘s WWDC said very clearly other so called AI companies would be also added over time which means they’re gonna have to fight it out with other companies it is ultimately a loss for OpenAI not to get any money from Apple and not to have an exclusive agreement with Apple particularly when Sam hasn’t had that initial public offering for OpenAI yet… For there is no moat around AI it is open season.
    edited June 16
    neoncat
     0Likes 1Dislike 0Informatives
  • Reply 13 of 17
    danox said:
    danvm said:
    danox said:
    Laughable this is the typical Wall Street MBA solution. Go try and buy your way in (movie studio, gaming company) there are no shortcuts in chip hardware or software development, even if you found the right AI company (there isn’t one) today and if you could buy them next month. It will take years of work to even get to first base at this moment, who has a AI solution that the public is willing to use that actually makes a actual profit upfront right now in this new world of AI? Answer no one.

    Apple was right in not giving OpenAI or anyone else billions of dollars for AI software, which is currently a work in progress …..
    Apple didn't gave OpenAI billons of dollars but gave access to billions of customers.  In this agreement, I think OpenAI won.  

    They didn’t win anything you seemed to forget that Apple in the Apple Intelligence presentation at last year‘s WWDC said very clearly other so called AI companies would be also added over time which means they’re gonna have to fight it out with other companies it is ultimately a loss for OpenAI not to get any money from Apple and not to have an exclusive agreement with Apple particularly when Sam hasn’t had that initial public offering for OpenAI yet… For there is no moat around AI it is open season.
    True.. OpenAI, Gemini, Anthropic, Claude etc. are just cloud-based commodities which will run at marginal cost at the end. There is no moat.
    Additionally, it is also a lesson learned move from Apple that an exclusive agreement could get eyed by the court sooner or later (Google Search as an example).
    williamlondon
     0Likes 1Dislike 0Informatives
  • Reply 14 of 17
    blastdoorblastdoor Posts: 3,845member
    blastdoor said:
    Typically the point of an acquisition is to gain technology, productive assets (like factories), employees, or customers. But I don't see Apple as falling short in any of those areas. 

    Apple's problem really is with their senior management's failure of vision and strategy. Either senior management needs to self-correct or the board will have to get involved. 
    Apple is not a technology company. The technology plays in the background. Apple is a design company.
    Twenty years ago this statement was definitely true. But in the last ten or so years I think Apple has been more innovative as a tech company. By far the most exciting thing they’ve accomplished in that period is Apple Silicon. They still make iterative design improvements to existing products but they seem to be having some real difficulty designing new successful products. The car project was killed after spending a ton on it. AVP made it out the door, and is technologically very strong, but at least so far it hasn’t come together as a compelling product outside of a few niche cases.


    muthuk_vanalingam
     1Like 0Dislikes 0Informatives
  • Reply 15 of 17
    danvmdanvm Posts: 1,506member
    danox said:
    danvm said:
    danox said:
    Laughable this is the typical Wall Street MBA solution. Go try and buy your way in (movie studio, gaming company) there are no shortcuts in chip hardware or software development, even if you found the right AI company (there isn’t one) today and if you could buy them next month. It will take years of work to even get to first base at this moment, who has a AI solution that the public is willing to use that actually makes a actual profit upfront right now in this new world of AI? Answer no one.

    Apple was right in not giving OpenAI or anyone else billions of dollars for AI software, which is currently a work in progress …..
    Apple didn't gave OpenAI billons of dollars but gave access to billions of customers.  In this agreement, I think OpenAI won.  

    They didn’t win anything you seemed to forget that Apple in the Apple Intelligence presentation at last year‘s WWDC said very clearly other so called AI companies would be also added over time which means they’re gonna have to fight it out with other companies it is ultimately a loss for OpenAI not to get any money from Apple and not to have an exclusive agreement with Apple particularly when Sam hasn’t had that initial public offering for OpenAI yet… For there is no moat around AI it is open season.
    Apple won something if they had access to Apple customers. And considering the popularity of ChatGPT in the Apple App Store, I see them being the preferred AI provider for most Apple customers. It seems that ChatGPT results will get better thanks to Apple and their customers.  It think that's an easy win for OpenAI, and had to pay nothing to Apple. Looks like both companies had to give something to win something.  
    edited June 16
     0Likes 0Dislikes 0Informatives
  • Reply 16 of 17
    mattinozmattinoz Posts: 2,680member
    Or Apple can make a marketplace for AI utility that allows smaller startups to compete with the big players. Sure, Buying the ones that sense to long term generally utility but still making money letting niche utility providers by streamlining access to the massive customer base of Apple devices.
     0Likes 0Dislikes 0Informatives
  • Reply 17 of 17
    Paging the folks behind the PA Semi acquisition...
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