Elon Musk's criticism of Apple's ChatGPT integration wipes $400B off Wall Street.

At 1 AM Beijing time on June 11, Apple CEO Tim Cook announced the commencement of the 2024 Apple WWDC Global Developers Conference.

During the conference, Apple CEO Tim Cook revealed the debut of Apple’s first generative AI model, Apple Intelligence, which will be freely available to the public. Apple Intelligence encompasses several key functions, including voice interaction, text creation, and image generation.

Additionally, Apple announced a partnership with OpenAI to integrate their ChatGPT. This integration will embed ChatGPT into iOS, iPadOS, and macOS systems, allowing users to access features like image and text comprehension through ChatGPT.

Siri will also be enhanced with ChatGPT capabilities, enabling users to send questions, documents, and photos to ChatGPT via Siri. Furthermore, ChatGPT will be integrated with Apple’s writing tools to assist users in generating content.

Apple’s integration of GPT-4 into Apple Intelligence will be available later this year on iOS 18, iPadOS 18, and macOS Sequoia.

In fact, Apple made significant efforts at this developers’ conference, dedicating over 40 minutes—one-third of the entire keynote—to AI features alone.

However, some media outlets pointed out that this presentation was primarily aimed at Wall Street and investors, which might explain why Apple users didn’t feel a significant impact. The crucial point is that Wall Street wasn’t impressed either, as Apple’s stock price still dropped after the conference concluded.

After watching the presentation, consumers responded with a resounding “Is that it?” It seems Wall Street shared the same sentiment. Despite Apple’s cool and impressive presentation, the AI features showcased in 2024 are already widely available through numerous existing AI tools, making Apple’s offerings appear somewhat lackluster.

Moreover, Wall Street’s lack of enthusiasm can be attributed to several key factors:

Intense Market Competition

Apple faces fierce competition from multiple tech giants in the AI field. Companies like Google, Microsoft, and Amazon have already accumulated extensive experience in AI technologies and applications, launching widely used AI products.

• Google: Alphabet, Google’s parent company, reported in its 2023 financial statement that its investment in AI research exceeded $20 billion. Google’s AI technologies, such as TensorFlow and DeepMind, have made significant advancements in various fields, including healthcare, energy, and finance.
• Microsoft: Microsoft’s collaboration with OpenAI involves an investment of over $1 billion, and they have introduced numerous AI services on the Azure cloud platform, widely applied in enterprise solutions.
• Amazon: AWS (Amazon Web Services) generated AI-related revenues amounting to several billion dollars in 2023, offering a range of AI and machine learning services, such as Amazon SageMaker and Rekognition.

These companies not only possess technical advantages but also hold significant positions in market applications. In comparison, Apple’s AI products are primarily concentrated on Siri and some smart hardware functions, making their overall ecosystem and market influence relatively weaker.

Insufficient R&D Investment

According to some analyses, Apple’s investment in AI research and development is relatively low. Despite Apple investing substantial resources in other areas (such as hardware design and operating system development), Gartner’s analysis reveals that Apple’s overall R&D expenditure in 2023 was about $28 billion. However, most of this was allocated to hardware development and operating system optimization, with specific investments in AI not detailed. In contrast, companies like Google, Microsoft, and Amazon invest heavily in AI R&D annually, consistently releasing significant technological breakthroughs and research results. Investors might perceive Apple’s innovation and breakthrough efforts in AI as insufficient, making it challenging for them to lead in future AI competition.

In conclusion, the combination of formidable competition and perceived underinvestment in AI development likely contributed to Wall Street’s lukewarm reception to Apple’s latest AI announcements.

Limited Commercial Applications

Although Apple uses AI technology in its products (such as Siri and smart camera functions), the scope and depth of these applications are relatively limited. In contrast, Microsoft’s Azure AI services have been widely applied across various industries, such as autonomous driving, healthcare, and financial analysis. These commercial applications not only generate direct revenue but also enhance the company’s overall influence and market value in the AI field. The limitations of Apple’s commercial AI applications may cause investors to doubt its future market potential.

Lack of Clear Strategic Direction

Apple’s strategic layout and future plans in the AI field are relatively vague. Compared to other companies, Apple lacks transparency and clarity in its AI development roadmap. For example, Google and Microsoft have released multiple AI development roadmaps and research reports, regularly updating their progress and future plans. In contrast, Apple rarely publicizes its AI technology development route and future plans, which might lead investors to lack confidence in Apple’s future direction and potential in the AI domain.

Dependence on Hardware Sales

Apple’s primary revenue still comes from hardware products. The 2023 financial report shows that about 60% of its revenue comes from iPhones, 15% from Macs, and 10% from iPads. Although service-related revenue is growing, it still mainly relies on hardware sales. While Apple’s hardware products hold a significant market position, this reliance on hardware sales might be limiting in an AI-driven future market. In comparison, Amazon and Microsoft’s cloud services, including AI services, are rapidly growing, demonstrating stronger adaptability to the AI market. Investors may worry that Apple’s AI initiatives are insufficient to shift its dependence on hardware sales, hindering its ability to gain competitive advantage and market share in the future AI market.

Loss of Technical Talent

Reports indicate a significant loss of technical talent in Apple’s AI division. According to LinkedIn data, several of Apple’s AI researchers left for other tech companies or startups in 2023. For instance, former Apple AI chief Ian Goodfellow left to join Google. This talent drain could impact Apple’s ability to innovate and advance in AI technology, further reducing investor confidence. Technical talent is crucial for driving AI development, and such losses may result in Apple’s lagging behind in AI progress.

Despite privacy and data security being significant selling points in Apple’s latest announcement, these aspects have ironically become a focal point of criticism. Apple claimed to have developed a private cloud computing system for their cloud-based AI model, adhering to their existing privacy strategies on the iPhone, ensuring that hardware, software, and even programming languages are secure.

However, users expressed skepticism: “Just because you say it’s secure, does that make it secure?” “Does swearing on it make it safe?”

Elon Musk, the founder of Tesla and SpaceX, sharply criticized this claim: “Apple can’t develop its own AI but can ensure that OpenAI protects your security and privacy? That’s obviously absurd. Apple has no idea what happens to your data once it’s handed over to OpenAI. By doing this, they’re outright betraying their users.” He also mentioned that if Apple integrates OpenAI at the operating system level, his companies would ban the use of Apple devices.

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Do you believe in Apple’s future development? Share your thoughts in the comments section!