Apple End Runs The AI Giants

TECH IN THE NEWS

Election 2024 - Economist predicts ‘Ruinous’ Trump economic policy, Election ballot drop box set on fire. Judge could halt Musk's $1M giveaway. Trump victory odds, tariff fears crash emerging markets. Musk claims audit can cut fed budget by $2T.

AI Disney - Disney reportedly plans to unveil its first major AI initiative focused on post-production and VFX workflows.

CRE Crisis - The commercial real estate industry is pushing for Trump’s tax relief and incentives to continue in the next administration, as the sector struggles on.

Japan Votes - Japan’s ruling LDP coalition failed to receive a majority for the first time since 2009. Political scandals and the cost of living have eroded voters’ trust.

Bitcoin Breakout - BTC surged above $71K as $175M in shorts were liquidated with $48B in trading volumes and major ETF inflows. Traders are thought to be betting on bullish market conditions post-election.

COMPANIES TO WATCH

Sierra - The enterprise AI customer service chatbots startup co-founded by Bret Taylor, raised $175M, at a $4.5B valuation led by Greenoaks with ICONIQ & Thrive.

Waymo - The Alphabet spin-out raised a $5.6B Series C round led by Alphabet, with previous investors Andreessen Horowitz, Fidelity, Perry Creek, Silver Lake, Tiger Global, and T. Rowe Price also stepping up.

Boeing… Gone - Boeing Co. plans to launch a capital raise as early as Monday, to boost its liquidity. It is also reportedly exploring the sale of its ailing space business.

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THE HOTTEST THING IN TECH
Apple’s End Run on the AI Competition

Apple officially released its Apple Intelligence AI system yesterday alongside powerful new iMacs to run it, with more hardware to follow this week. The first wave of AI features is available to anyone (free) on iOS 18.1 and the new macOS Sequoia 15.2 update, with more features and OS support to roll out over time. Early testing reports are that these tools are not all that impressive compared to what rivals are already offering. But that was pretty much as expected, Apple is generally understood to be behind in the modern AI race, even admitting it is at least 12 months behind its main AI rivals. But, that’s only true through a lens valuing AI giants based on “more models and features faster”. Apple has decided to avoid that game entirely. It may be strategically positioned to be a leader in the AI race, not by creating new models faster than rivals, but by leveraging its existing products, ecosystem, and distribution. 

More Powerful Hardware

Apple also kicked off “Mac week” by unveiling a refresh to its all-in-one, iMac desktop by adding a M4 chip to power the new AI features. It’s 2x more powerful than the original M1 iMac and vastly better than the M3. But the most hotly awaited announcement was the m4 macbook pro line which just leaked. Looks like we can now expect 3 new M4-powered laptops this week to power AI on the move. The new M4-powered Mac Mini rumored to have a tiny footprint similar to the Apple TV.

Apple Gets Intelligent

The first batch of Apple Intelligence features includes integrated writing tools; image cleanup; article summaries; and a typing input for the redesigned Siri experience. iOS 18.2, iPadOS 18.2, and macOS Sequoia 15.2 will bring another round of tools including Genmoji, Image Playground, Visual Intelligence, Image Wand, and ChatGPT integration. These are in dev betas with no ETA on a full release date yet.

Investors Playing The Long Game

Apple's stock is currently trading at a premium despite analysts predicting only a slight increase in revenue for Q3. This is likely due to a few factors. First, investors may appreciate that Apple is not investing as heavily in AI as competitors, like Microsoft and Google. Second, investors may be optimistic about the potential for Apple Intelligence to boost iPhone sales. Lastly, investors may simply have confidence in Apple's strong market position in the smartphone industry and its surrounding ecosystem, which faces no immediate threats.

To expand on the last point, the key to its success is its control over the entire tech stack, from hardware to software to data. It has designed chips specifically tailored to its software, which allows for a seamless and efficient user experience. These chips, powered by Neural Engines, facilitate on-device ML for features like crash detection and health monitoring. Furthermore, Apple has introduced Private Cloud Compute (PCC), extending the processing power of devices while maintaining user privacy.

Siri has also significantly improved thanks to PCC and on-device LMs with a deeper understanding of user context, access to more data types like texts and photos, and better conversational awareness. Apple’s control over the entire stack, from data to chips to cloud, allows it to provide a comprehensive and integrated AI experience. By focusing on providing value to end-users through a tightly controlled and optimized ecosystem, it’s arguably poised better in the AI race than Google or Microsoft.

Apple’s Strategy

For earnings this week, a big question will be the ROI timeline on PCC and how it plans on monetizing these AI features, if at all. While Apple is marketing these features heavily, their functionality is not yet optimal. To offset costs, Apple appears to be subsidizing development by including an estimated $200 premium in the price of the iPhone16, effectively treating it as a partial cost for AI. This strategy is risky as it restricts access to AI to a small minority of the latest iPhone owners.

It’s two options for monetization are: continue incorporating costs into hardware or introduce a subscription model. Current market conditions and the nascent stage of their tech makes a subscription model unlikely in the near future. Apple's OpenAI deal will offer limited free ChatGPT usage to users in the short-term, but the long-term strategy relies on its advantage in agentic AI, which will enable it to integrate useful agent-based tasks seamlessly into its device ecosystem to make our lives better. So, Apple looks well-positioned for the long term, with a strategy for monetizing based on its own models and eventually advanced agentic features.

Founder of Tech Startup LiveSwitch in Asheville NC has a Go Fund Me to support Asheville Church Network’s efforts to support the worst affected by the hurricane. Funds go directly to an orphan home, single moms, and food banks for the hungry.

TRENDING TOOLS AND BUZZY TECH
Tools

Coinbase - ‘Based Agent’ on-chain AI crypto trading bots on OpenAI, Replit.

Meta - New search engine for AI chatbot. | 2. First AI news deal to feed real-time news into chatbot. | 3. “Open” version of Google’s NotebookLM.

Infosys - New SLMs use NVIDIA AI fine-tuned with Infosys data.

Google - ‘Jarvis’ AI agent takes over Chrome to do purchasing or booking tasks.

Tech

U. of Virginia - Graphene-infused 3D-printed concrete emits 31% less carbon.

China Nuclear Corp. - World 1st chip detects nuclear radiation from phones.

STM - Turkish underwater EV drone, does 24hrs/charge ~1 mile deep.

SETI x Penn State - New method could reveal interplanet alien communications.

NYU - GOTCHA, a new CAPTCHA-like real-time deepfake detection method.

FOR INVESTORS
Open Deals

Request an intro to founders - [email protected]

1. 🔥⏱️ Robotics for Agricultural Efficiency - Pittsburgh - Built & deployed robotic hardware for the largest U.S. tree nurseries, reducing costs and increasing efficiency by 50x. Hardware and AI data layer. Beginning to scale globally. Post-revenue, at capacity. (Seed+)
   

2. 🔥⏱️ Quant Trading Software Company - New Jersey - Large-scale automated day-trading algorithm designed for volatile U.S. equity markets. Profitable through extensive backtesting and live simulation. Seeking equity investment for software company.

3. Cricket for the Modern World - India - Physical and virtual ecosystem fostering cricket experiences for enthusiasts and upcoming pros. Data-driven, locally proven, globally scaling. (Seed)

🔥 — hot deal!
⏱️ — leaving soon.

FOR EMPLOYERS
Job Candidates

Request an intro to candidates - [email protected].

1. Struck Capital Venture Associate, ex-West2East (Russell Wilson) Director of Special Projects, ex-Phoenix Holdings Investment Associate. Harvard BA. Vietnamese pro basketball player.

2. Lockheed Martin Software Engineer, ex-Rutgers Junior Full Stack Developer. Secret clearance. Expertise in C++, PHP, SQL. Rutgers BA in Computer Science.

🚨TECH BUZZ ANNOUNCEMENT:

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Please get in touch with feedback on this change and any other suggestions as to what you would like us to feature more of.