Apple‘S (NASDAQ: AAPL) The Worldwide Developers Conference (WWDC) last week sparked renewed interest in the stock and sent it to new all-time highs. However, there are a few winners and losers associated with the initial announcement about Apple Intelligence and the overall view of artificial intelligence (AI).
So, who are the winners and losers of this conference? The answers may surprise you.
Winner 1: Taiwanese semiconductor manufacturing
For me, there is a clear winner in this announcement: Taiwanese semiconductor manufacturing (NYSE: TSM). Taiwan Semi’s business is already doing well, but it just got a catalyst. In 2021, 2022 and 2023, Apple’s revenue was 26%, 23% and 25% of TSMC’s revenue, respectively. The smartphone industry has been struggling lately, but that could soon turn around.
Because Apple Intelligence will only be available for iPhone 15 models and newer, it isolates about 90% of iPhone users to older generations. If Apple Intelligence becomes the latest must-have technology, it could fuel new demand for iPhones.
Since a large portion of Taiwan Semi’s revenue comes from this business, the company could benefit from this.
Winner 2: Microsoft
Microsoft (NASDAQ: MSFT) is also a major beneficiary of this announcement. Because Apple has chosen to partner with OpenAI (the creator of ChatGPT), the company has chosen which Microsoft has invested heavily in. This also validates the use of ChatGPT across the Microsoft Office suite as it will create a fairly seamless experience for the millions of people out there. people who use Office products and iPhones every day.
While iPhones are intended to handle most of these workloads on the smartphones themselves, some of it may need to be outsourced to servers due to the heavy nature of the AI model. When that happens, it will happen on Microsoft Azure servers, because that’s where OpenAI has its technology running. This will also serve as a larger revenue stream for Microsoft.
Loser 1: Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Google’s parent company, is on the wrong side. Alphabet’s generative AI model, Gemini, competes with ChatGPT. Apple could have chosen Gemini as the model to run its Apple Intelligence on, as it would have been a logical progression of its partnership.
This breaks a tradition of Google and Alphabet working together: the Google search engine is the default search engine on Apple products because Alphabet pays for it. Recently, this was the subject of an antitrust lawsuit, which may have influenced Apple’s decision to choose ChatGPT over Gemini.
Either way, Gemini isn’t Apple’s choice for its Apple Intelligence, and that’s a missed opportunity for Alphabet.
Loser 2: Apple
My latest loser is Apple, which may come as a surprise. Apple is likely to see a surge in demand for its iPhones, driving up sales. But that’s not the point I’m trying to make.
Apple is a huge company with resources few can dream of. It has armies of software engineers and more than $60 billion in cash and marketable securities on its balance sheet as of the end of its second fiscal quarter (ended March 30). Yet it couldn’t create its own generative AI model in-house?
This shows how far behind Apple is in the AI race, having been completely overwhelmed. Working with an external company will always raise questions about data security and what information is shared with other companies. If it kept that internal, those questions wouldn’t be as relevant.
Instead, this could be the Achilles heel of a product that otherwise seems solid. While Apple will likely see increased sales, the long-term consequences of not bringing this technology in-house could be problematic for Apple.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool holds positions in and recommends Alphabet, Apple, Microsoft and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
2 winners and 2 losers from Apple’s latest artificial intelligence (AI) announcement, originally published by The Motley Fool
