Apple and Alphabet's Comeback After AI Lag?..."Latecomers Are More Fearsome"

Falling Behind in AI Trends
Apple and Alphabet, Once Criticized,
Now Attempting a Comeback with New AI Strategies
Gaining Investor Confidence
Stock Prices Rebound

Among the seven major Nasdaq big tech companies known as the 'Magnificent 7 (M7),' Apple and Alphabet, once considered latecomers in artificial intelligence (AI), have recently unveiled new AI strategies, leading to a rebound in their stock prices. The market analyzed that investors have gained confidence in Apple and Alphabet's AI-related investment and development plans.

Apple Preparing to Produce AI-Focused ‘M4’

According to Bloomberg on the 11th (local time), Apple is preparing to produce its self-developed chip ‘M4,’ designed with a focus on AI. Bloomberg cited anonymous sources saying, “Apple is pushing updates for all Mac models equipped with the M4.” Although Apple released Macs with the previous M3 chip at the end of October last year, it was evaluated that the performance improvement over the M2 was not significant.

Apple is reportedly aiming to launch products equipped with the M4 between the end of this year and early next year. Initially, it plans to release the base 14-inch MacBook Pro with the M4, along with the high-end 14-inch and 16-inch MacBook Pro models and the Mac Mini. Subsequently, it will launch the 13-inch and 15-inch MacBook Air models, followed by the Mac Studio in mid-year and the Mac Pro toward the end of the year.

On this day, Apple’s stock price surged 4.3% compared to the previous trading day. This marks the largest increase in 11 months since May last year. Apple’s stock had fallen about 13% since the beginning of the year until the previous trading day amid intensifying AI technology competition, with criticism that it lacked a strong breakthrough among big tech companies, and it also lost its position as the world’s largest market capitalization company to Microsoft (MS).

Experts analyzed that Apple’s AI strategy this year could create a new legend. Bloomberg explained, “Apple’s biggest focus this year is to add new AI features across its entire product line,” adding, “Many of these are designed to run AI on the device itself rather than on remote servers.” Apple will also incorporate AI technology into the iPhone this year. JP Morgan forecasts that iPhone sales, which had slowed down, will significantly increase by 2026 due to this.

Forget ‘AI Hallucinations’... The Changed Alphabet

Alphabet, which suffered from so-called ‘AI hallucinations’ where generative AI produced false responses, is now being reevaluated for its AI strategy and is increasingly likely to reclaim its $2 trillion market capitalization title. In February, Alphabet’s AI model ‘Gemini’ made errors such as generating the German Nazi army as Asian ethnicity, causing a sharp drop in stock price, but it has since rebounded 21% from its low point.

Wall Street analysts believe that Alphabet’s subsequent AI blueprint gave investors a certain level of confidence. Particularly, this week, attention was focused on Google’s flood of AI strategies. Google plans to unveil its self-developed server CPU ‘Akshon’ in the second half of the year and will release a new version ‘v5p’ of its AI chip, the Tensor Processing Unit (TPU), while also announcing plans to enhance Gemini. Additionally, Google will integrate Gemini into Google Cloud.

Bloomberg reported, “Alphabet’s demonstration this week of creating ads and short videos using Gemini also excited investors.”

Alphabet’s stock price is said to be uniquely undervalued among the M7. Alphabet’s forward price-to-earnings ratio (PER) is 21 times, matching the overall S&P 500 index. Justin Post, an analyst at Bank of America (BoA), predicted, “Alphabet’s new AI plans will continue to act as a positive driver for its stock price.”