Nvidia's market value has peaked, can Apple's AI turn around against the wind?

Investor.com

2024-06-23 08:05Published on the official account of Beijing Investor Network

"Investor's Network" Wang Jianfan

In 2024, the trend of artificial intelligence makes Nvidia the brightest winner.

At 1:01 a.m. on June 19, Nvidia's market capitalization jumped to $3.33 trillion, surpassing Microsoft to become the world's most valuable company.

So far, NVIDIA, Microsoft, Apple, a three-legged pattern has been formed.

As the majority shareholder of OpenAI, Microsoft has translated the technical advantages of generative AI into practical applications, deeply integrating the GPT series models into its office software and cloud services, which has greatly promoted Microsoft's market performance expectations. In January 2024, Microsoft surpassed Apple to become the world's most valuable company.

Apple, which is leading the way in the smartphone era, is faltering in the rapid development of AI. The creators of the "iPhone moment" seem to have been left behind by the AI wave.

AI is surging, and Apple's sales are under pressure

In November 2022, OpenAI's chatbot ChatGPT sparked a global generative AI boom. Chinese and American tech giants such as Google, Microsoft, Meta, as well as Alibaba and Baidu, are deeply developing large model technology.

At the same time, hardware manufacturers such as Samsung, Huawei, Xiaomi, and OPPO have also integrated large model technology into mobile phones, marking the innovation of AI technology in consumer electronics.

Competitors are menacing with AI, and Apple's hardware revenue, which has been slow to move, has begun to decline.

In fiscal year 2023, Apple's hardware revenue, including mobile phones, computers, tablets, etc., fell by 6% year-on-year, of which computers fell the most, with a decline of 27%; Mobile phone revenue, which accounts for nearly 60% of revenue, fell by about 3.4%.

In the Chinese market, Apple is facing a more competitive environment, with sales and market share declining significantly.

According to Counterpoint, Apple's mobile phone sales fell 9% year-on-year in the fourth quarter of 2023, and its market share fell to 20.2% from 23.7% in the previous year. By the first quarter of 2024, its market share has shrunk further to 15.7%.

Sales are under pressure, and Apple, which has always been known for its value preservation, has launched the largest price reduction promotion in history in China.

In January 2024, Apple's official direct store launched a three-day price reduction promotion for all series of products, of which the newly released iPhone 15 series will be reduced by up to 800 yuan. During the "618" shopping festival, e-commerce platforms also joined the ranks of price reductions, providing unprecedented discounts. In the self-operated stores of major platforms, the price of each model of iPhone15 is about 80% off compared with the time of release.

As a company that derives its main revenue from hardware sales, Apple has continued to face criticism of a lack of innovation in recent years.

For a long time, the market expected Apple to be disruptive technologies and products, but since Cook took over as CEO, the company seems to have fallen more into a gradual iterative mode, and this "toothpaste-squeezing" update strategy has made Apple lose its previous market-disrupting spirit.

With the rise of AI and the aggressive deployment of competitors in this area, Apple's lack of innovation is becoming more prominent.

When the game break is underway, Apple is betting on AI in the whole market

Twelve years ago, Siri was first introduced with the launch of the iPhone 4s and quickly became synonymous with chatbots.

At that time, Siri, as an innovation of Apple, became the earliest memory of many people's "AI" assistants. Despite its initial popularity, Siri was soon nicknamed "artificial retardation" due to its lack of intelligence.

In today's fierce competition for generative AI, Apple's pace seems to be as slow and passive as the clumsy Siri, until early 2024, when it suddenly gave up building cars and bet on AI.

On June 10, 2024, Apple held its 2024 Worldwide Developers Conference (WWDC24).

In less than two hours of the press conference, Apple took AI as the finale, and spent nearly half of the time to introduce it. One small detail is that this time Apple finally stopped talking about "machine learning" and used Apple Intelligence to show a full embrace of AI.

This update aims to change the way humans interact with each other, allowing AI-enhanced phones to perceive user needs more autonomously, which is a direction that the industry generally agrees on. Under this new framework, Siri is smarter, more natural, and more precise in matching real context and personalized needs.

Through AI integration capabilities, Apple can connect different applications to provide services, from text editing to image processing, content summarization, and audio transcription, and provide them in tooled form in all Apple end products, including iPhone, iPad, and Mac.

To the surprise of the market, Apple decided to cooperate with OpenAI this time to introduce the GPT-4o large model to the iPhone. Giving such core competencies to others is a major compromise for Apple, which has always pursued technological independence.

This decision has also sparked a controversy over privacy and security. Tesla CEO Elon Musk criticized Apple's move on social media as disrespectful to user privacy, and even threatened to ban the company from using Apple devices if it integrated OpenAI technology into its operating system.

It should be noted that Apple has shown restraint in this cooperation, and Siri's call to ChatGPT is only an accessibility function and is not fully integrated. Altman, the always high-profile OpenAI CEO, also did not appear at the press conference.

Siri co-founder Dag predicts that this collaboration may only be a short- to medium-term relationship. Obviously, Apple has its own abacus.

Calling NVIDIA, the industry pattern is being rewritten

In a recent earnings call, Apple CEO Tim Cook expressed strong confidence in the company's AI technology. He predicts that in the field of AI, Apple will not only surpass its competitors, but also hopefully set new industry standards.

Apple's senior vice president of software engineering, Craig, has also repeatedly emphasized that this conference is just the beginning of Apple's AI, and there are more features to look forward to in the future.

Obviously, Apple does not intend to make a wedding dress for Nvidia, but wants to go straight to hand-to-hand combat.

This confidence may be based on Apple's long-term layout in the field of AI. According to a report by market research firm Stocklytics, Apple has acquired 32 AI companies so far in 2023, making it one of the most active acquisitions in this space in the tech industry.

Industry analysts believe that Apple's strategy to promote Apple Intelligence is gradual, starting with its hardware devices, leveraging the more than 1 billion iPhones it already has and a huge user base. As AI capabilities are gradually incorporated into these devices, it is expected to greatly increase the demand for new applications and stimulate their market vitality.

In summary, the competition between Apple and Nvidia in the field of artificial intelligence has shown their respective advantages in different markets. Although Nvidia has a strong influence in the B-end market, Apple is even stronger in the consumer-facing C-end market.

With the slowdown in the growth of the mobile Internet, the competition between the two companies is no longer limited to the control of the hardware supply chain, but also extends to the competition for the right to speak in the AI era, and the past contradictions have exacerbated the conflict between the two companies.

Since Apple and Nvidia forced him to replace his GPU in court, the relationship between the two sides has taken a sharp turn for the worse, and in 2016, Apple directly stopped using Nvidia's GPU. Nvidia announced in 2019 that its CUDA software products will no longer support Apple's MacOS operating system, completely cutting off compatibility with Apple's entire ecosystem products.

Against this backdrop, Apple continues to strengthen its technological independence, with the recently announced Apple Intelligence system using a new technology called "private cloud computing", emphasizing transparency and verifiability of data processing, and making it clear that these data centers will not use Nvidia chips, but will use Apple's own chips.

With Apple's entry into the game, the AI technology battlefield is becoming more and more lively.

In the face of Nvidia's dominance in the field of AI chips, other tech giants such as Qualcomm, Google and Intel are also accelerating the pace of self-development and promoting projects that support multiple AI chips.

The prelude to a long-distance race in technology has begun, and every participant is fighting hard for future market dominance. Let's wait and see how the race unfolds. (Produced by Thinking Finance)■

View original image 61K

•