Wedbush: Apple AI strategy set to 'change the game' – Apple (NASDAQ:)’s newly unveiled artificial intelligence (AI) strategy is set to change the game for the tech giant, according to a note by Wedbush following Apple’s annual WWDC event in Cupertino.

Analysts at the firm were eagerly awaiting updates on Apple’s AI strategy and enhancements across both hardware and software ecosystems, which are expected to drive growth over the coming years. Significant updates to the overall operating system ecosystem and the beginning of its AI strategy were among the key highlights.

Apple showcased numerous software enhancements in what Wedbush considers another “flex the muscles moment” for the company, as it heads into a robust product cycle over the next 6-9 months, led by the iPhone 16 launch later this year.

Apple’s AI strategy aims to leverage its extensive installed base around personalization and Low Latency Models (LLMs) on the phone. This could alter Cupertino’s growth trajectory and trigger an AI-driven iPhone upgrade cycle starting with iPhone 16.

The tech giant announced Apple Intelligence, a new personal intelligence system that enhances its software by integrating this technology. It also upgrades existing apps to make them more useful and create a more intuitive experience powered by generative AI models.

Apple Intelligence, powered by Apple’s in-house chips including A17 and its M1 through M4 chips, provides highly-capable LLMs and diffusion models that offer on-device semantic indexing and personalized computations. It also provides private cloud compute, which flexes and scales initial capacity and draws server-based models when on-device processing is insufficient.

Apple also announced a key partnership with OpenAI, backed by ChatGPT-4o, which will provide broader world knowledge and domain expertise across Apple devices. This technology will be available later this year on iOS 18, iPadOS 18, and MacOS Sequoia. Users can access ChatGPT for free without creating an account, while paid subscribers will have access to more advanced features.

Analysts at Wedbush noted. “Apple is taking the right path to implement AI across its ecosystem while laying out the foundation for the company’s multi-year AI strategy across the strongest installed base of 2.2 billion iOS devices over the coming years with the Street giving no credit for AAPL’s AI monetization.”

The firm maintains its OUTPERFORM rating for Apple and a price target of $275.


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