Meta in secret talks with Apple on AI cooperation, global collaboration layout highly anticipated by the industry

According to the Zhitong Finance and Economics APP, reports have revealed that negotiations between Meta Platforms Inc. (META.US) and Apple Inc. (AAPL.US) are quietly underway, with the goal of integrating Facebook's generative AI models with Apple's AI system, Apple Intelligence. This move indicates that despite Apple having its own AI models, it is seeking partners' help to handle more complex or specific tasks.

In addition to Meta, startups Anthropic and Perplexity are also discussing integrating their generative AI technologies into Apple Intelligence. However, these discussions have not been finalized and may end in failure. Currently, both Apple and Meta have not commented on this matter.

The report points out that collaboration with Apple will bring AI companies a wider product distribution channel. The negotiation involves offering their services through Apple's intelligent sales premium subscription model.

It is understood that Apple first introduced Apple Intelligence at the Worldwide Developers Conference on June 10 and plans to incorporate generative AI technology into its latest operating systems, including the voice assistant Siri on iPhone, iPad, and Mac.

Currently, Apple has partnered with OpenAI and plans to integrate ChatGPT into the iOS 18, iPadOS 18, and macOS Sequoia operating systems, expected to be launched in the second half of this year. Although the collaboration with OpenAI is not exclusive, Apple may add other AI large models in the future.

TF International Securities analyst Ming-Chi Kuo provided a brief comment on the release of Apple Intelligence, stating that it fully demonstrates Apple's advantages in ecosystem integration and interface design, emphasizing the convenience of integration and the enhancement of existing applications. However, investors are more eager to see original and indispensable features. In addition, investors are concerned about whether Apple Intelligence can be launched simultaneously globally and whether the key selling point of integrating ChatGPT can be used in all major markets worldwide.

Outside the international market, Apple's choice of AI partners in China is also attracting attention. Reports suggest that Apple is actively exploring opportunities to collaborate with local Chinese companies to promote its Apple Intelligence services. It is reported that Apple has been in contact with several Chinese AI large model companies, including Baidu, Alibaba, and AI startup Baichuan Intelligence. This strategy may be in response to competitive pressure in the Chinese market, especially when local competitors have already integrated AI features into smartphones. Market research firm Counterpoint Research's data shows that Apple's market share in the Chinese smartphone market has dropped to third place, surpassed by two major local brands. Therefore, Apple needs to find the right local partners in China to better adapt to the market environment and consumer demands, enhancing its competitiveness in the Chinese market.

However, due to the uncertainty brought by the EU's "Digital Markets Act," European users will not be able to experience three major features: Apple Intelligence, iPhone Mirroring, and SharePlay Screen Sharing. This news is undoubtedly a blow to long-awaited users, especially considering that Apple Intelligence is one of the most anticipated features in the iOS 18 upgrade.

Although European and Chinese users may not fully experience all the features of Apple Intelligence in the short term, Apple's continued investment and innovation in the field of artificial intelligence, as well as the technological advancements showcased at its global developer conference, still make people hopeful for its future development. As Apple continues to explore and address challenges related to market access and language support, Apple Intelligence is expected to become a significant driver of growth for Apple's products and services.

Institutions Bullish on Apple's AI Potential, Target Prices Raised

Apple's AI potential has received high praise from market institutions, with CFRA and Bernstein both raising Apple's target stock price to $240 per share. This adjustment reflects a strong rebound in Apple's stock price since the end of April, rising 27% from a low of around $165 per share, with the new target price indicating a potential 17% upside.

CFRA analyst Angelo Zino, who previously set Apple's target stock price at $210, predicts that Apple will transform the iPhone into the "ultimate personal assistant." At this month's global developer conference, Apple showcased its Apple Intelligence product, an upgraded version of Siri with enhanced conversational capabilities, marking a new advancement for Apple in the field of intelligent digital assistants.

Zino believes that Wall Street analysts may underestimate the sales of the upcoming iPhone 16, forecasting a sales growth of 3% to 5%, and Apple's ability to increase the iPhone's selling price. He further points out that Apple's AI will support consumers' ongoing upgrade needs, which are driven by Apple's loyal user base and large install base. This evolutionary, rather than cyclical, nature of artificial intelligence will help Apple achieve stable growth for many years.

Bernstein analyst Toni Sacconaghi also holds an optimistic view on Apple's stock prospects, previously setting a target price of $195 for Apple's stock Sacconaghi believes that Apple demonstrated its leadership position in the field of artificial intelligence during the WWDC keynote speech, and has the ability to popularize AI technology to the public through its user base of over 1 billion iPhone users.

He added, "Apple not only can bring AI to the public, increasing its use in daily applications, but also reportedly did not pay fees to ChatGPT, demonstrating its strong market influence." It is reported that Apple plans to integrate ChatGPT into its upcoming AI products and is expected to release it later this year alongside the iPhone 16.

Sacconaghi pointed out in his report that Apple's massive user base provides a huge opportunity to monetize AI features. In addition to driving iPhone upgrade cycles through AI features, Apple can also generate advertising revenue through AI-powered search queries, and if more AI-focused applications are released, Apple's App Store revenue is expected to further increase.

Sacconaghi also suggested that Apple can use Apple Intelligence as a channel intermediary for third-party applications to earn business commissions or promotion fees, providing Apple with additional sources of revenue.

Furthermore, Wedbush analyst Dan Ives is optimistic about Apple's prospects, having previously emphasized Apple's leadership position in consumer AI.

Ives stated, "We believe that with the arrival of Apple Intelligence, Wall Street is beginning to realize that Cupertino (Apple's headquarters) will be the gatekeeper of the consumer AI revolution." His views once again highlight Apple's leading role in shaping consumer AI usage and experience.

Ives further added, "Developers and other tech giants, including Meta and Google (GOOGL.US), may join this competition in the short term." This indicates that while Apple is in a leading position in the AI field, other tech giants are also actively positioning themselves to play a significant role in this area.

Previously, at the Seeking Alpha Investment Summit, Ives predicted that Apple's market value is set to exceed $4 trillion and will occupy a significant position in the consumer AI market. He further pointed out, "AI is expected to bring a $30-40 increase in earnings per share for Apple." This expectation is nearly 15% higher than the current level, demonstrating Ives' high confidence in Apple's commercial potential in the field of AI.

Overall, analysts are generally optimistic about Apple's prospects in the field of artificial intelligence, believing that it can not only drive product sales but also explore new revenue streams, providing long-term growth momentum for the company. With the launch and development of Apple Intelligence, Apple is expected to further consolidate its leadership position in the consumer AI market and drive sustained growth in the company's market value