• Apple (AAPL) stock is down relative to Microsoft because of AI.
• Apple plans to run large language models on its devices, not just on its cloud.
• Assuming all this works, patient investors will be rewarded.
Before buying Apple (NASDAQ:AAPL) stock, which is already worth nearly $3 trillion, you need to know how it plans to grow. The easy answer is AI, but what does that even mean in the context of the iPhone, iPad, and Apple Watch?
Apple has already spent a year considering that question. The introduction of the answers is still months away. Until then, investors should expect a bumpy ride. But if you’re there for it, if you buy the dips, I think you’ll make money down the road.
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AAPL Stock and a Plan for the Future
Apple’s AI vision is based on the two areas where it made its reputation, client devices and safety.
A recent paper by Apple scientists explains it. Apple plans to install its large language model onto its devices by using flash memory and reading the data in large chunks. These chunks are defined as “neurons,” taken out of memory as new questions are posed. Apple thinks this technique can let it run LLMs that are twice the size of the Dynamic memory available, increasing inference speed up to 500%.
Current LLMs also have a huge Garbage In, Garbage Out problem. When you “train” software on bad data, you get bad answers. Apple is working to license legitimate data to solve this problem.
This is in contrast to ChatGPT, backed by Microsoft (NASDAQ:MSFT). ChatGPT wants to take copyrighted data for free and run Generative AI through its Azure cloud.
Apple’s view is a big risk, but it could result in big rewards for APPL stock.