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Technology
PATRICK SEITZ

Apple Reportedly Close To Deal With OpenAI To Add AI Features To iPhone

Apple reportedly is close to a deal with ChatGPT creator OpenAI to use its generative artificial intelligence technology on iPhones. Apple stock rose Monday on the news.

Cupertino, Calif.-based Apple wants to integrate generative AI technology into its next iPhone operating system, iOS 18. Details of that software release will be announced at Apple's Worldwide Developers Conference, which starts June 10.

Bloomberg reported late Friday that Apple is finalizing terms to incorporate OpenAI's ChatGPT technology into iOS 18. Apple also has been talking with Alphabet's Google to license its Gemini AI chatbot, Bloomberg said.

Apple Chief Executive Tim Cook spoke broadly about the potential for AI on Apple devices on May 2 during a conference call with analysts.

"We believe in the transformative power and promise of AI, and we believe we have advantages that will differentiate us in this new era, including Apple's unique combination of seamless hardware, software and services integration," Cook said.

Apple Stock Rises On ChatGPT Report

On the stock market today, Apple stock climbed 1.8% to close at 186.28.

Adding AI to Apple's next handsets, the iPhone 16 series, will give consumers a reason to upgrade, Wedbush Securities analyst Daniel Ives said in a client note Monday. Apple also could monetize some AI services through subscriptions, he said.

"As more apps and tasks are able to be completed with generative AI, Apple stands to monetize a significant revenue base over the coming years with its massive and unmatched 2.2 billion (unit) installed base (of hardware)," Ives said.

He added, "We would expect Apple to build out a next level Siri technology with OpenAI that can do complex tasks for Apple users and more advanced features that will eventually be a separate monthly subscription service along with other AI features."

Apple Stock Retakes Key Level

However, Jordan Klein, a trading desk analyst with Mizuho Securities, downplayed the impact of any Apple deal with OpenAI or Google.

"My take is none of this is thesis changing for any of these stocks," Klein said in a client note. "We will get a lot more talk and potential partnerships in the months to come around Apple and AI."

Apple stock has been a laggard among the tech giants, but its shares have perked up recently. After its March-quarter earnings report on May 2, Apple stock rose above its 200-day moving average line for the first time in over two months, according to IBD MarketSurge charts.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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