CUPERTINO, Calif. — Nasdaq introduced its market open festivities to Apple’s sprawling Silicon Valley headquarters on Tuesday, the eve of the corporate’s fiftieth birthday.
From a desk inside Apple Park, the ring-shaped campus that Steve Jobs spent his final years serving to design, Tim Prepare dinner rang the opening bell and, within the course of, ushered within the iPhone maker’s second half-century.
It was a celebratory event, however one arriving at a pivotal level for an iconic American firm that faces main challenges at this time and within the years forward because the expertise business will get swept up by synthetic intelligence.
Previous to the AI growth, which began with the launch of OpenAI’s ChatGPT in late 2022, Apple was in a position to win by dominating the patron gadget market and including its Siri voice assistant throughout its product portfolio.
The pitch has at all times been easy: Pay a premium for a tool, and belief that what occurs on it stays yours, whether or not it is messages, pictures or notes. Private knowledge is not gas for an promoting engine.
Two of Apple’s megacap tech friends took the alternative strategy. Google and Meta are the giants of digital promoting, gifting away their key companies at no cost and making tens of billions of {dollars} a yr in revenue by concentrating on customers with promotions.
Apple’s precept got here from Jobs, its co-founder and longtime CEO. Prepare dinner, his successor, has been preaching it since turning into CEO in 2011, shortly earlier than Jobs’ dying. For a lot of Apple’s 50-year historical past, it has been gospel in Cupertino.
That is why Apple’s newest transfer feels so out of character.
In January, Apple struck a multiyear deal to make use of Google’s Gemini AI as a part of a rebooted Siri. Google has already been paying within the vary of $20 billion a yr to be the default search engine on the iPhone. In AI, that relationship flips: Apple turns into the one paying for the underlying intelligence by licensing Google’s expertise.
Cash is not the principle challenge — Apple recorded internet money of $54 billion within the newest quarter and returned $32 billion to shareholders, largely by means of buybacks. Fairly, the priority, in keeping with Asymco analyst Horace Dediu, is what the association with Google means for consumer knowledge and whether or not the search firm makes use of it to bolster its algorithms.
“That is the place the wall must be,” Dediu mentioned. “That they do not give that data to Google, and Google would not get smarter and enhance its core enterprise as a result of Apple is sharing data with them.” He added that, “To the extent that the intelligence improves, that ought to keep inside Apple.”
Apple declined to make anybody out there for this story, however CNBC spoke with former staff and individuals who spent a long time finding out the enterprise. The overall sentiment is that Apple is at a crossroads, caught between the ethos that formed the corporate and a technological shift that is forcing it to compete on unfamiliar floor.
Apple is on this quandary partially as a result of, in comparison with its tech friends, the corporate has been sluggish to AI. The long-awaited AI replace to Siri has confronted delays, although Apple says it is nonetheless coming by year-end. In 2024, the corporate launched Apple Intelligence, which incorporates picture turbines, textual content rewriters, the power to summarize push notifications and an integration with ChatGPT. Shopper response has been blended.
The place Apple has actually bucked the pattern is in holding capital expenditures in examine, slightly than following the trail of Amazon, Microsoft, Alphabet and Meta, that are collectively committing a whole bunch of billions of {dollars} a yr to new AI infrastructure to allow them to assist cutting-edge fashions and workloads.
As rivals have been constructing big mannequin companies, involving coaching by means of scraping of data and knowledge, Apple steered clear, a choice that many within the business say left the corporate at a drawback in generative AI.
Apple CEO Tim Prepare dinner holds an iPhone 17 professional and an iPhone air, as Apple holds an occasion on the Steve Jobs Theater on its campus in Cupertino, California, U.S. Sept. 9, 2025.
Manuel Orbegozo | Reuters
‘Fork within the highway’
Prepare dinner has referred to as privateness a “basic human proper” for years. In an look on ABC’s “Good Morning America” in mid-March, he reiterated that Apple does as a lot processing as potential on the gadget. When mandatory, Apple makes use of what it calls Non-public Cloud Compute, which is actually a safe extension of the gadget within the cloud.
Gene Munster of Deepwater Asset Administration says Apple’s management misinterpret the market.
“It comes all the way down to a failure to acknowledge the place the world was going and the pace issues have been occurring,” he mentioned, leaving the corporate now at a “fork within the highway” relating to the long-term relevance of its merchandise.
The problem, Munster mentioned, is in “powering an AI digital assistant.” If Apple would not remedy that, he warned, someone else will, a improvement that might eat away at Apple’s management over the longer term.
Siri ought to have given Apple a head begin. It launched in October 2011, a day after Jobs’ dying. It might be years earlier than Amazon Alexa or Google Assistant hit the market. However the product stagnated.
Apple “principally blew a five-year lead” mentioned Walt Mossberg, a former Wall Avenue Journal columnist who lengthy chronicled Apple.
Dag Kittlaus, Siri’s co-founder, left Apple after Jobs died, telling CNBC not too long ago, “I did not wish to work with out him.”
Kittlaus mentioned that Siri stored bettering on the technical aspect, notably in speech recognition. However with out Jobs’ instincts and product imaginative and prescient, the corporate by no means actually expanded Siri’s capabilities, he mentioned.
“There aren’t any additional technical limitations to any a part of the Siri imaginative and prescient that we had from the outdated days,” Kittlaus mentioned. “We might kill to have the expertise again then that exists now.”
Adam Cheyer, co-founder of Siri and Viv Labs
Picture courtesy of Adam Cheyer
Adam Cheyer, who created Siri alongside Kittlaus, mentioned the unique imaginative and prescient was much more bold than what shipped. The concept was to create a system that might each reply questions and take motion, finally supporting a broader ecosystem that could possibly be utilized by exterior companies, much like the App Retailer. He mentioned the problem was combining “understanding and doing” in a single system.
The primary firm that may try this with “the fitting expertise” can be “the dominant expertise firm for this subsequent AI age,” Cheyer mentioned. “And I believe Apple can nonetheless play there.”
At this time, AI is a cloud enterprise. The fashions behind ChatGPT, Gemini and Anthropic’s Claude are too huge to run on a telephone. However fashions are shrinking. Inside just a few years, hefty workloads will run on a chip contained in the telephone.
That is Apple’s wager, and the corporate has been integrating AI-capable silicon into its units since 2017. When AI strikes onto the gadget, the pondering goes, Apple’s privateness downside begins to unravel itself. Consumer queries all get processed domestically, by no means touching a cloud server.
Dediu says it follows a historic sample of computing shifting from the middle to the sting, from mainframes to PCs to telephones.
Tony Fadell, who constructed the iPod and the primary three iPhones earlier than co-founding Nest and promoting it to Google, mentioned early indicators of the computing shift are already seen. As extra individuals experiment with private AI brokers, some are operating the infrastructure themselves, usually on units like a Mac Mini at residence.
The Google partnership could possibly be the bridge for Apple, Kittlaus mentioned.
“Folks get motivated after they see a path to victory,” he mentioned. “I believe that’s the second.”
The OpenAI problem
As AI strikes to the sting, the query for Apple is whether or not the gadget it is spent the previous 20 years perfecting stays the middle of computing.
Final yr, OpenAI purchased Jony Ive’s design agency, io, for $6.4 billion and charged the previous Apple design chief with constructing one thing as consequential for the AI period because the iPhone was for the transfer to cellular.
“That is an amazingly huge ask and amazingly huge imaginative and prescient,” mentioned John Sculley, who was Apple’s CEO from 1983 to 1993, in an interview. “You may’t underestimate somebody as good as Jony Ive.”
Ive, who designed the iPod, iPhone, iPad and Apple Watch, amongst different devices, is reportedly growing a household of screenless units for Sam Altman’s firm.
Dediu mentioned that is the situation Apple ought to fear about — not a greater gadget, however a less complicated one that does not want a display. If the AI interface seems to be one thing individuals put on slightly than maintain, Apple’s benefit in visible design stops mattering.
It is not an strategy that is labored but.
Ken Kocienda, who spent 15 years at Apple and invented keyboard autocorrect for the unique iPhone, left in 2017 and joined AI {hardware} startup Humane just a few years later. Humane tried a screenless, AI-native gadget, however the effort failed.
Kocienda mentioned the thought should still show to be proper, simply too early. Fadell is much less involved.
“These pins, pens, all these pendants — I believe they’re all equipment to the telephone,” he mentioned. “You are going to see a federation of units … and so they’ll all be AI-enabled, versus eradicating units out of your life.”
If the way forward for AI {hardware} revolves across the telephone, Apple could also be poised to steer once more, with a subsequent chapter formed by the identical strengths that constructed the corporate.
That was the backdrop at Apple Park earlier than daybreak on Tuesday. As staff and Prepare dinner gathered on the garden, the grass nonetheless held the night time’s rain.
The sky cleared simply as Nasdaq’s opening anthem rolled throughout the yard, and Prepare dinner stepped ahead to ring the bell. The entire scene felt nearly impossibly managed, as if even the climate had deferred to Apple’s choreography.
Every thing got here collectively simply in time to indicate Wall Avenue, and the corporate is betting its Siri refresh will do the identical.
The anniversary celebration was capped by a efficiency from Paul McCartney, one other flourish in a manufacturing designed to undertaking confidence within the path ahead as Wall Avenue waits expectantly for Apple’s AI comeback.
