Apple, OpenAI Alliance Sends Stock to All-Time High... Google 'Cries'

Apple's Stock Soars 7% on AI Service Launch Announcement, Hits All-Time High
OpenAI Joins Apple Ecosystem, Google Supplying Search Engine Faces Setback

Apple's stock soared 7% to reach an all-time high after the company announced plans to integrate artificial intelligence (AI) services into its devices such as the iPhone and iPad. Analysts suggest that Apple, which joined the generative AI race late, has formed an alliance with OpenAI to become the ultimate winner, potentially triggering demand for device upgrades like the iPhone.

The market anticipates that if OpenAI enters the Apple ecosystem, it could significantly impact other big tech companies. Since Apple directly sells its products, which are 'modern technological conglomerates,' to consumers, it currently relies on competing big tech technologies such as search engines (Alphabet) and cloud services (Microsoft). If Apple launches products equipped with generative AI, companies like Alphabet could suffer major losses due to decreased traffic.

Apple Stock Jumps 7% to Record High

On the 11th (local time), Apple closed at $207.15 per share on the New York Stock Exchange, up 7.26% from the previous trading day. This marks the first time Apple’s stock price has surpassed $200. Apple's market capitalization reached approximately $3.18 trillion, reclaiming the second spot from Nvidia ($2.97 trillion). Although Apple unveiled 'Apple Intelligence' and announced plans to integrate generative AI features into its operating system (OS) at the Worldwide Developers Conference (WWDC) held the previous day, the stock initially plunged amid criticism that the offering lacked differentiation.

However, optimism grew as forecasts emerged that sales of the iPhone 16, set to launch this year, could increase. Apple formed a partnership to utilize OpenAI’s ChatGPT technology, a leader in generative AI. It is expected that the voice assistant Siri will require specifications equivalent to or higher than the iPhone 15, released last year, to operate smoothly with generative AI. Concerns over personal data leaks were also alleviated. Apple emphasized that customer personal data used in generative AI models operates solely within Apple’s own ecosystem, and experts reassured the market by noting that Apple has never allowed third-party access to its core technology licenses.

Wall Street expresses optimism that Apple’s AI feature integration could boost sales of devices like the iPhone. Bank of America projects a positive future for Apple, analyzing that the new features will lead to an upgrade cycle for the 'IntelliPhone' (Intelligence + iPhone) that leverages AI. Morgan Stanley raised Apple’s target stock price to as high as $270.

Big Tech Landscape Expected to Shift

Apple’s strengthened AI strategy is expected to bring significant changes to the Nasdaq big tech landscape. Foreign media are particularly weighing which big tech companies will benefit or suffer from Apple’s collaboration with OpenAI.

Microsoft (MS), as the largest investor in OpenAI, is expected to gain indirect benefits. Since 2019, MS has invested $13 billion in OpenAI, holding a 49% stake. Although some say that OpenAI’s alliance with Apple might not be welcomed by MS, given its role as the primary supporter of OpenAI, MS will exclusively host OpenAI’s software on its cloud platform 'Azure,' inevitably increasing MS’s revenue.

OpenAI’s position is expected to strengthen further. According to market data, ChatGPT has about 100 million weekly active users worldwide. Considering Apple’s devices total approximately 2.2 billion units, the number of ChatGPT users could increase exponentially.

The Wall Street Journal (WSJ) explained that Alphabet (Google’s parent company), a longtime partner of Apple, will face challenges managing its position. Alphabet has paid billions annually since 2003 to have its internet search engine used as the default on Safari. However, Siri’s function to connect users to ChatGPT is expected to reduce Google’s traffic. Annette Zimmermann, Vice President of AI at global consulting firm Gartner, said, “Alphabet will certainly be closely monitoring (Apple and OpenAI’s collaboration).”

Samsung, an ‘AI Phone Competitor,’ Also Accelerates

Meanwhile, Samsung Electronics appears to be accelerating efforts to enhance the quality of its products such as AI Galaxy. On the same day, Bloomberg reported that Samsung merged two U.S. research centers focused on AI technology and hired a former executive who was responsible for Apple’s Siri operations as the head of the new unit.