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Apple Inc (NASDAQ:). is reportedly ramping up its efforts in generative artificial intelligence (AI), planning a $1 billion investment to integrate AI tools into Siri, Apple Music, and other applications. The tech giant’s move is aimed at competing with Google (NASDAQ:)’s Bard AI bot and OpenAI’s ChatGPT, according to Bloomberg.
The company has posted several job openings focused on AI, indicating its intent to develop a generative AI-based developer experience platform for internal use and support the app development team. One particular opening in the Apple Retail department is geared towards developing a conversational AI platform for customer engagement.
Apple is also exploring ways to incorporate generative AI into development tools such as Xcode, presentation software Keynote, and apps like Pages for creating auto-generated playlists. These efforts are part of the company’s larger initiative to infuse AI into its product suite and services.
In addition to these developments, Apple has built Ajax, a language model, and Apple GPT, a chatbot. These tools are awaiting integration into Siri, Messages, Xcode for aiding developers, and Apple Music for auto-playlists.
According to InvestingPro, Apple’s management has been aggressively buying back shares, which is often seen as a sign of confidence in the company’s future prospects. The tech giant also yields a high return on invested capital, and its strong earnings should allow the management to continue dividend payments. Moreover, Apple has raised its dividend for 11 consecutive years, which is a testament to its financial stability and commitment to rewarding shareholders. InvestingPro Tips also suggest that Apple operates with a high return on assets, which is an indication of the company’s efficiency in using its resources.
Even with these advancements, compared to Microsoft (NASDAQ:)’s investment in OpenAI’s ChatGPT and Google’s Bard AI bot, Apple’s public AI initiatives are still considered lagging. Its only notable AI achievement so far has been an enhanced auto-correct feature in iOS 17.
The market has reacted moderately optimistically to Apple’s AI push. The firm’s shares have surged by nearly 37% in 2023. Analysts have given Apple’s stock 20 Buys and nine Holds, with an average price target of $207.51, suggesting a 20.2% upside potential. InvestingPro data shows that Apple’s market cap is $2710.0B USD, with a P/E ratio of 28.88 and a PEG ratio of -19.75, which investors may want to consider when evaluating the company’s valuation.
When queried by Seeking Alpha about these developments, Apple chose not to comment. However, with a revenue of $383.93B USD and an operating income of $112.23B USD as per InvestingPro data, Apple’s financial health appears to be strong, which could support its ambitious AI initiatives.
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