Apple needs its big AI moment

Apple's WWDC is its "most-anticipated" event in years, one analyst said. It needs an AI announcement to catch up with OpenAI, Google, and Microsoft.

• Apple's WWDC will begin June 10, and fans are hungry for any news on its generative AI plans.
• Google, Microsoft, and OpenAI have all given impressive AI demonstrations in recent weeks.
• Analysts weighed in on what else Apple will have to do at WWDC to satisfy investors.

Apple has some ground to make up at its much-awaited annual Worldwide Developers Conference in June.

Big tech names like OpenAI, Microsoft, and Google have all hosted events over the last three weeks where artificial intelligence was the main topic of discussion, as well as attention-grabbing new advances in their technologies. Not only that: they've been showcasing their products for quite some time — OpenAI's ChatGPT chatbot was launched in November 2022, for example.

That's made Apple's lack of a big generative AI announcement so far particularly noticeable. In fact, analysts told Business Insider that the tech giant will have to talk about AI at WWDC if they want to keep investors happy.

WWDC, which Wedbush Securities managing director Dan Ives called Apple's "most anticipated event in a decade," kicks off on June 10 and lasts four days at Apple Park in Cupertino, California. At the 2023 WWDC, the big reveal was the Apple Vision Pro headset.

The conference comes hot on the heels of Apple's "Let Loose" event on May 7, where the company introduced new iterations of the iPad Pro, iPad Air, and compatible accessories — but didn't go into its AI plans. However, one big sign an announcement may be coming at WWDC was the unveiling of its M4 chip, which Apple described as an "outrageously powerful chip for AI."

Tim Cook was also vague about AI strategy during Apple's earnings call on May 2. The CEO spoke of "big opportunities across our products" for generative AI and promised that Apple is "well positioned" to take on the space. That's all left investors hungry for more details.

"We think investors will take any generative AI announcement positively," Morningstar tech analyst William Kerwin said. Morningstar has a two-star rating on the stock, with a fair value estimate of $170.

One option for Apple could be teaming up with another company. Gene Munster, managing partner at Deepwater Asset Management, told BI that Apple is "so far behind" that he's expecting a partnership with OpenAI to bridge the gap between it and the competition. Bloomberg reported last month that the two firms have been discussing a possible business alliance that could bring OpenAI's technology to iPhones. Apple is also in talks with Google about licensing its Gemini chatbot, Bloomberg said.

Munster also told BI that he expects big upgrades to Siri to bring about a more helpful and conversational voice assistant through the power of AI.

Although Apple may be late to announce its plans, analysts said it still has firepower in the AI arms race — if it does announce anything.

"Apple doesn't have to be first, but it can't be on the outside looking in when it comes to AI," Ives, who has an "outperform" rating on the stock with a $275 price target, told BI.

Its current lineup of products may help get consumers using Apple's offering instead of competitors', Deepwater's Munster said. He identified Apple's "seamless" continuity between devices and privacy as assets for the company in the battle to be the top player in AI.

"Apple's primary advantage is its massive installed base of devices and sticky, dedicated users," Kerwin at Morningstar told BI. We'd expect any new-gen AI announcement to see strong adoption when released."