By Angela Palumbo
Apple Intelligence hasn't hit the market yet, but when it does, the company could make a lot of money with a "smarter Siri," according to an analyst at BofA Securities.
Apple announced its generative artificial intelligence software, Apple Intelligence, in June at the World Wide Developers Conference. The technology is expected to help users edit and summarize emails and generate images, as well as making Siri more useful. Apple launched its iPhone 16 on Sept. 9 at its Glowtime event, but the phone reached stores on Sept. 20 without GenAI capabilities.
That has left Wall Street with a lot of questions, like whether iPhone demand will improve once Apple Intelligence becomes available? So far, multiple analysts have reported that demand for the newest smartphone is weaker than it was for last year's version.
BofA Securities analyst Wamsi Mohan is looking ahead to not only how AI is going to alter the way Siri works, but how the tech company can make money from the changes.
Mohan rates Apple as a Buy with a $256 price target. He wrote in a research note Friday that the company will use Siri as a virtual assistant that is capable of performing tasks for users like booking a ride, ordering dinner, or scheduling a meeting.
"This all begs the question, who will Siri recommend or even book on behalf of the user? Our answer is whoever pays to be presented first to either Siri or the user," Mohan wrote.
Some companies that could step up to pay for those recommendations include Uber Technologies, Lyft, and DoorDash. Mohan wrote that one way this could work is if a user asks Siri to book them a ride from the airport, Siri would then present that user with multiple options from different ride-share companies. It would list the company that pays them the most as the first option.
"We estimate that deep Siri integration with apps could drive $3bn in revenues in 2026 and could approach 50bn in a decade," Mohan wrote.
Mohan's optimism comes during a time of uncertainty for many Apple investors. Wall Street was initially excited about Apple Intelligence and its potential to encourage people to upgrade their phones. But the company said at the Glowtime event that not only is the software still not available in the U.S., it will take even longer to roll out in other languages around the world. That has put a damper on some analysts' belief that users are going to be rushing to get new iPhones this year, or even next.
Shares of Apple were up 0.2% Thursday to $227.89. The stock has gained 18% this year, compared with a 20% increase in the S&P 500.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
September 27, 2024 14:12 ET (18:12 GMT)
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