Apple urged to revamp AI strategy as shares tumble

Apple is facing increasing pressure from investors to change its approach to AI.

The company’s shares have dropped 16% this year, resulting in a loss of over US$630 billion in market value.

Concerns are growing over delays in AI feature rollouts and a perceived lack of commitment to AI advancements.

Historically, Apple has avoided major acquisitions, with its largest purchase being the US$3 billion acquisition of Beats in 2014.

Reports indicate that Apple is considering acquiring AI startup Perplexity AI, which has recently reached a valuation of US$14 billion.

Analysts, including Dan Ives from Wedbush, believe such a move could enhance Apple’s AI capabilities.

Despite updates to Siri and efforts to hire talent, Apple has struggled to meet expectations and retain top AI engineers.

Leadership changes and calls for strategic shifts highlight growing urgency for Apple to take decisive steps in AI.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Apple’s acquisition strategy reveals both caution and evolution

Apple’s historically restrained approach to acquisitions stands in contrast to the aggressive AI investment strategies of its competitors.

Since 2014, Apple’s largest acquisition remains the $3 billion Beats Electronics deal, while competitors have made significantly larger investments in recent years.

Even Apple’s other notable acquisitions, such as Shazam for approximately $400 million in 2018 and Intel’s smartphone modem business for $1 billion in 2019, demonstrate a pattern of strategic but measured acquisitions aimed at enhancing existing product lines rather than major capability expansions.

The company’s hesitancy toward large acquisitions may be informed by past missteps, such as the $100 million Power Computing Corp. deal in 1997 that negatively impacted Apple’s brand and the $62 million PowerSchool acquisition that was later sold due to poor alignment with core business objectives.

A potential Perplexity AI acquisition would represent a significant departure from Apple’s traditional approach but aligns with how the company has historically acquired technology to enhance its ecosystem rather than entering entirely new markets.