Apple Debuts AI Innovations at WWDC and Shares Hit Record High

Apple finally unveiled AI-related updates at its Worldwide Developers Conference (WWDC) on Monday, pushing shares to a record high Tuesday.

Apple CEO Tim Cook and other top executives introduced groundbreaking "Apple Intelligence" technology, detailing how artificial intelligence will be woven into a range of applications including Siri and integrating OpenAI's ChatGPT into its devices.

1. Context-driven notifications: Apple Intelligence can recognize which notifications are important to your personal context.

2. Writing improvements: Apple Intelligence will introduce systemwide proofreading and style improvements across third-party and native apps.

3. Image generation: Apple Intelligence can create generative photos based on your photo library, similar to some other platforms. There are three styles: Sketch, Illustration and Animation.

4. Cross-application tasking: Apple Intelligence can delve into your apps and execute tasks on your behalf. One of the examples Federighi gave was asking Apple Intelligence to pull up files sent by a contact during a certain time period.

5. Focus on personal context: Apple Intelligence can draw upon the full suite of your activity but also on what is on your screen. For example, you can ask it whether a shifted meeting will cause you to be late to a personal commitment, Federighi said.

6. Private Cloud Compute: Apple Intelligence will leverage cloud-based models on special servers using Apple Silicon to ensure that user data is private and secure. If a request needs to go to a cloud server, Apple says it will only send a limited selection of data in a "cryptographically" secure way.

Elon Musk, the co-founder of six companies including Tesla, SpaceX, and OpenAI, has criticized Apple's integration of OpenAI as "an unacceptable security violation".

In a series of posts on the X platform, Musk voiced his concerns regarding user privacy. He proposes a stringent new security policy requiring visitors to his companies to deposit their Apple devices in a Faraday cage upon entry, underscoring his grave concerns about data security.

Wedbush has maintained an "Outperform" rating for Apple with a target price of $275. Analyst Dan Ives highlighted this year's Apple WWDC as the most significant in a decade, suggesting that Apple AI strategy set to 'change the game'. Ives predicts that Apple's stock could continue to rise, driven by the achievement of current iPhone sales targets, the release of pent-up demand in upgrades, and over 10% growth in services.

Evercore ISI's Amit Daryanani has expressed increased confidence in Apple's AI strategy following WWDC, seeing potential for an iPhone super cycle driven by restricting Apple Intelligence to recent iPhone models. He remains optimistic about Apple's ability to deliver GenAI to users without extensive GPU capital expenditures.

"There isn't anything here that propels the brand ahead of its as-expected trajectory of incrementalism," said Dipanjan Chatterjee, analyst at Forrester. "Apple Intelligence will indeed delight its users in small but meaningful ways, it brings Apple level with, but not head and shoulders above, where its peers are at."

Before the conference, noted analyst Ming-Chi Kuo had indicated that with the unveiling of several AI features at the event, Apple would no longer be seen as lagging in the AI industry. However, Kuo also mentioned that it might take a while for these new AI capabilities to translate into noticeable revenue and profit growth for Apple.

Chatterjee further remarked that the enhancements in Siri and intelligent features might help mitigate recent declines in device revenue but are unlikely to attract a surge of new Apple enthusiasts.

"Investors clearly want a more comprehensive and ambitious strategy from Apple when it comes toAI." Tejas Dessai of Global X added.