Apple Unveils AI, Vision Pro Updates; Stock Drops 2%

Key Takeaway

• Apple unveiled "Apple Intelligence" AI features, integrating OpenAI's ChatGPT into Siri, with a beta test later this year and full rollout in 2025.
• Vision Pro updates include visionOS 2 and international launches starting June 13; new software updates for iPhone, iPad, Mac, and Apple Watch were also announced.
• Despite the announcements, Apple's stock fell nearly 2% to $193.26 as investors viewed the event as uninspiring compared to competitors' advancements in AI.

AI Integration Announcement

Apple Inc. unveiled its long-awaited artificial intelligence features at the annual Worldwide Developers Conference in Cupertino, California. The tech giant introduced tools supported by OpenAI’s ChatGPT, aiming to deliver technology that is personalized, safe, and deeply integrated into its software ecosystem. The platform, named “Apple Intelligence,” will assist users in summarizing text, creating original images, and retrieving relevant data. Craig Federighi, Apple’s Senior Vice President of Software Engineering, emphasized the importance of privacy, stating that many AI workloads will be handled on-device to ensure personal data is not “warehoused and analyzed in someone’s AI cloud.”

The partnership with OpenAI will allow Apple customers to access ChatGPT via the Siri digital assistant at no extra cost. Federighi described this initiative as “AI for the rest of us.” OpenAI CEO Sam Altman, who attended the event, expressed his enthusiasm on social media, stating he was “very happy” to be teaming up with Apple. The AI features will be available through a beta test later this year, with some capabilities expected to roll out in 2025.

Vision Pro and Other Updates

Apple also provided updates on its augmented reality headset, Vision Pro, which was a major highlight of last year’s conference. The new software update, visionOS 2, includes features such as turning regular photos into 3D images and new gesture controls. Despite the hype, sales of the Vision Pro have been sluggish. Apple announced plans to launch the Vision Pro internationally, with preorders starting in China, Hong Kong, Japan, and Singapore on June 13, and sales beginning on June 28. This will be followed by launches in Australia, Canada, France, Germany, and the UK, with preorders starting on June 28 and sales on July 12.

In addition to Vision Pro, Apple introduced new software updates for its other products. The iOS 18 update for iPhones will allow users to customize and secure their applications, including a feature to lock individual apps. The iPadOS 18 will finally bring a calculator app to the iPad, along with a new floating tab bar and SharePlay features. The macOS Sequoia update will make it easier to mirror the iPhone on Mac computers, and the watchOS 11 will introduce a new Vitals app for health metrics and expanded cycle tracking features.

Market Reaction

Despite the array of new features and updates, investor reaction was tepid. Apple’s stock fell almost 2% to $193.26 as of 2:52 p.m. in New York, following the keynote presentation. The stock had been up 2.3% for the year through the end of last week. Greg Martin, co-founder of Rainmaker Securities, had predicted this outcome, stating, “If the event is uninspiring, I think the stock will be stagnant for a while.”

Apple’s AI announcements were highly anticipated, but the company is seen as playing catch-up in the generative AI industry, where competitors like Alphabet Inc.’s Google and Microsoft Corp. have already made significant advancements. Apple’s early lead in AI with the launch of Siri in 2011 was quickly overtaken by Google Assistant and Amazon’s Alexa. The arrival of OpenAI’s ChatGPT at the end of 2022 further accelerated the competition.

Street Views

• Greg Martin, Rainmaker Securities (Bearish on Apple):

  "If the event is uninspiring, I think the stock will be stagnant for a while."

Management Quotes

• Craig Federighi, Software Engineering Chief of Apple:

  "Your personal data shouldn’t be warehoused and analyzed in someone’s AI cloud."