Apple (AAPL) stock has risen ahead of the company's highly anticipated Worldwide Developers Conference keynote presentation on Monday. That's when Apple Chief Executive Tim Cook and his executive team will reveal the company's strategy for artificial intelligence.
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What Apple will disclose at the WWDC show is a subject of great speculation. But media leaks point to several key announcements, including a new version of Apple's voice-activated digital assistant, Siri.
Analysts expect Apple to give Siri a brain transplant by adding generative artificial intelligence capabilities. The consumer electronics giant reportedly will leverage a partnership with ChatGPT creator OpenAI to overhaul Siri.
Apple likely will announce one or more partnerships with AI developers at WWDC after holding talks with OpenAI, Alphabet's (GOOGL) Google and Cohere, the Wall Street Journal reported.
Apple Stock Nearing Buy Point
Media reports indicate that Apple's approach to AI will lean toward practical consumer uses for the technology focused mostly on the iPhone. That starts with a rebuilt Siri.
"We see (Siri) evolving from a seldom-used service to the core feature of Apple's (iPhone) operating system," Morgan Stanley analyst Erik Woodring said in a client note Tuesday.
He added, "We expect Siri will be reintroduced as a next-gen, voice-activated virtual assistant capable of processing more complex commands directly on the iPhone."
Woodring rates Apple stock as overweight, or buy, with a price target of 216.
Apple stock is approaching a buy point of 199.62 out of a cup base, according to IBD MarketSurge charts. That buy point is also its all-time high, reached on Dec. 14.
On the stock market today, Apple stock slid 0.7% to 194.48.
Siri 2.0 Likely Highlight Of Apple's iOS 18
Today Siri is best for simple voice commands like setting a timer or alarm, turning on the phone's flashlight, or asking for a weather forecast or sports score. Ask anything more complex and you could get the dreaded "I found this on the web" response.
Siri 2.0 could provide summaries of emails and messages, smart notifications, new photo search and editing tools, and chatbot functionality, according to news leaks. It also could provide real-time language translation, transcription of audio recordings, and camera-based object and text identification.
The overhauled Siri will be included in iOS 18, the next release of Apple's iPhone operating system.
On-Device Vs. Data Center AI
News leaks point to Apple using mostly on-device AI, which will provide faster response times than queries to remote data centers. On-device AI also allows for greater security and data privacy.
The AI features initially will focus on Apple's native applications such as Notes, Pages, Mail, Messages, Calendar and Photos, reports say.
One unusual feature Apple has planned is the ability to create AI-generated emoji, Bloomberg reported. That will allow users to make custom emoji on the fly for any occasion, it said. Emoji are digital images used to express an idea or emotion in text messages.
Also, Apple will discuss Project Greymatter, software tools underlying its AI strategy, according to reports.
Apple Stock Catalyst: iPhone Upgrades
Apple could limit its new AI functions to the current iPhone 15 Pro models and the upcoming iPhone 16 handsets, Woodring said. That's because the AI features likely will require greater memory and computing capacity, he said.
In turn, that could spur an upgrade cycle among Apple's installed base of about 1.5 billion iPhone users.
"There is pent-up demand entering the iPhone 16 cycle later this year, as iPhone replacement cycles exiting fiscal 2024 will reach an estimated all-time high of 5 years," Woodring said.
Wedbush Securities analyst Daniel Ives agrees with that assessment.
AI features in the iPhone 16 will set up a "renaissance of growth that will spark a massive overdue upgrade cycle into 2025," Ives said in a client note Tuesday. He rates Apple stock as outperform with a price target of 275.
In addition to iOS 18, Apple on Monday will detail the next operating systems for the Mac, iPad, Apple Watch and Apple Vision headset.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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