Apple Inc. (NASDAQ:AAPL) is reportedly on the brink of finalizing a partnership with OpenAI that could bring significant AI features to its devices. Wedbush's Dan Ives believes it will open up AI revenue opportunities for Apple.
What Happened: Apple is close to sealing a deal with OpenAI, which would see the integration of ChatGPT into iOS 18 and the upcoming iPhone 16.
The partnership is expected to be officially announced at the Worldwide Developers Conference (WWDC) on June 10.
The collaboration could involve an OpenAI Chatbot with exclusive features that would enhance Apple's on-device and cloud-powered Large Language Models (LLMs). This would be supported by Apple's in-house high-end chips.
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Apple is also expected to leverage this partnership to introduce new AI features on the iPhone 16, potentially leading to a separate monthly subscription service and opening up a new revenue stream for Cupertino.
"We would expect Apple to build out a next-level Siri technology with OpenAI that can do complex tasks for Apple users," Wedbush said in a note seen by Benzinga.
More advanced features could require a subscription, which would bring in new revenue to Apple.
But looking beyond the revenue aspect of the partnership, Wedbush says that developers could also "flock to the Apple ecosystem" – this would benefit the Microsoft Corp. (NASDAQ:MSFT) developer ecosystem as well, the firm notes.
Wedbush maintained its "Outperform" rating for the Apple stock with a price target of $250.
Why It Matters: This partnership is expected to enhance the capabilities of Apple's virtual assistant, Siri. Gene Munster, a prominent Apple bull, believes that integrating OpenAI's ChatGPT on the iPhone will be the "biggest upgrade in Siri's 13-year history."
Apple's AI strategy has been a topic of discussion for some time. In April, Ives highlighted Apple's "best-installed user base" of over 2 billion, emphasizing the potential for AI monetization.
Despite the impending OpenAI partnership, Apple has also been making significant strides in AI research. In April, the company unveiled a new AI model, ReALM, that outperforms OpenAI's GPT-4.
Price Action: Apple's shares were up 1.16% in premarket trading on Monday, after closing at $183.05 on Friday, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.