Apple stops ‘thinking differently’ and joins the AI ​​herd: Morning Brief

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Save your condolences for the passing of the AppleCar and send your congratulations. Who needs an expensive, low-margin electric vehicle when you have ambiguous expectations of AI?

After an ill-fated decade-long odyssey, Apple has said goodbye to its car project and will divert resources to its artificial intelligence division. A blow for everyone who wanted to see exactly which generation of Fiat 500 Jony Ive would have paid tribute to.

If the decision was an admission of defeat — Elon Musk responded to the news on X with a greeting and cigarette emoji — it didn’t feel like it. The collective reaction from various analysts and the market came close to ‘cleaning out’.

Scuttling the insurgents’ multibillion-dollar efforts will allow Cupertino to focus on a broad AI strategy within the Apple ecosystem, says Wedbush Securities analyst Dan Ives.

Others have pointed to how Apple’s software and intuitive design have already reshaped the auto industry through CarPlay, software that connects iPhones to cars, effectively transforming other companies’ hardware into extensions of the walled garden.

And abandoning automotive software ambitions means there will never have to be a dented, muddy and – above all – rusty £3,000 product tainting the world’s cleanest brand on the road. Or on a lawn. As long as the updates keep coming, it will be new forever.

Apple took so long to walk away from the expensive gamble that the slowness looks like timeliness. New entrants have increased competition in the electric vehicle market, creating price wars and putting pressure on margins.

Even Tesla, the EV king whose anti-Detroit revolt inspired Apple’s vehicle ambitions, has hit roadblocks. Expected declining demand in 2024 has clouded the company’s prospects. And without Big Tech’s sprawling operations spanning multiple sectors, Tesla has fewer business lines to rely on. The stock is down almost 20% so far this year. As unlikely as Tesla’s rise has been, its long-term success still depends on largely unproven autonomous technology.

The astonishing growth of the Magnificent Seven winners, namely Nvidia (NVDA), Meta (META) and, to a lesser extent, Microsoft (MSFT), further begs the question of why Apple would chase Tesla as the early days of AI development tools are already over. been so promising.

Musk’s recent fuss about unlocking Tesla’s AI potential makes Apple’s auto exit even more attractive. CEO Tim Cook already has multiple channels for collecting intimate data and platforms for refining AI tools. Musk’s vehicles are parked outside; Cook’s screens keep you in check at night.

But there’s also something on the nose and a little somber about the world’s most valuable company shifting staff from its bold EV project to the trend of the moment, pursuing a more dazzling version of ChatGPT, or finding compelling ways to allowing users to sink deeper into their lives. Bank. You would think that the phrase “If you can’t beat ’em, join ’em” shouldn’t apply to a corporation that’s pouring hundreds of billions of dollars into tackling a problem.

At the company’s annual shareholder meeting earlier this week, Cook said Apple will share details about its new AI features later this year. It’s still not clear how AI will revive Apple’s growth story. But at least now we know where it won’t come from.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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