CNBC's Steve Kovach and Big Technology's Alex Kantrowitz join 'Closing Bell' to discuss Apple's AI ambitions, the company's desire to acquire and much more.

Cupertino

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Apple is reportedly evaluating its artificial intelligence strategy, with ongoing discussions about a possible acquisition of Perplexity, a company known for building products using leading AI models. While some experts argue that acquiring Perplexity would be a strategic move, Apple has historically avoided large acquisitions and may prefer to partner with or license technology from major AI providers such as OpenAI, Anthropic, or Google.

Internal debate continues within Apple, with some executives pushing for a bold move in AI, while others favor a more cautious approach. Apple CEO Tim Cook has stated that any acquisition would need to align with the company's product roadmap. The company is also considering the long-term nature of the AI race, believing there is still time to establish a strong position in the market.

Apple-Perplexity deal still a 'no-brainer'

We've discussed the topic so many times before with our own Apple reporter Steve Kovac and Big Technologies Alex Kantewicz We're bringing them back for more because there's more headlines guys. It's good to see you AK I'll begin with you because you're the one who sat right next to me here and said no-brainer Apple should do it yet. Another report now says they were talking about it. What do you think? I Think it's still a no-brainer if you think about what perplexity does it takes the leading AI models and it turns them into products Actually the product that it's using the AI models for number one is search But it's also done assistive type applications and AI voice, right? I think a lot of people are gonna start speaking with AI with their voice as opposed to chatting with them And I'm of the belief that most of the leading AI models are going to commoditize and if that happens What do you want to do? Do you want to be building these leading large language models? Or do you want to be building the best products that you can with the technology? And I think perplexity has shown that they really know how to build AI product you take a company like that you bring it into Apple which has the need and the Distribution and you're looking at a very productive marriage if you can get the culture Synchronization, right and I think that's the hardest part and I think that's why Apple has hesitated here Well, I don't know if the courtship is gonna gonna turn into matrimony. I mean, it doesn't sound to me Steve Kovac from what you've already told me on Whatever program we've had this conversation that doesn't smoke doesn't necessarily lead to fire in this case Yeah, and the M&A team at Apple they kick these things around all the time that this report that we're talking about now You know once upon a time they were looking at Tesla They were looking at so many other companies these major acquisitions, but we know this already Scott Apple does not like to do that It's this doesn't seem to be the direction they're going in. I'm sorry Alex I mean, I know you really want it to happen, but it doesn't seem like they want to do it instead They're looking to partner or license the technology for one of these major LLM providers right now in the running It seems like opening I anthropic and last week we got that report that Google Gemini is in the running and the clock is also ticking Scott because any day now the Department of Justice or I'm sorry the the judge in the DOJ case that Google lost is going to decide remedies and the fate of that relationship between Google and Apple and look Apple is still very attractive to these LLM makers because there's a huge distribution System for them. There's over 2 billion devices. They can get their LLM on and right now It seems like Apple was really focused on not necessarily acquiring their way to it but building doing what perplexity does building on top of these LLM models and doing it themselves because The Apple intelligence model just has not worked out It is well below par and well underperforms all these others Which Steve would suggest that maybe desperate times call for desperate measures whether? One would consider this to be a desperate move or not It would certainly be out of the norm it would be a company that doesn't like doing large deals The biggest deal it's ever done. Of course is beats. They're sitting on a mountain of cash Yeah, maybe they should because they have no choice and and that is there is a huge camp That's been saying that about Apple for so long. They need to acquire they need to buy they need to do something other than Acquiring their own stock and we've just seen over and over again throughout Tim Cook's tenure. They're just allergic to that They don't want to do that this this information report had some really good details how Eddie Q is kind of in that camp He really is pushing to do a big bold deal in artificial intelligence We also heard from Tim Cook a couple weeks ago I was in the same room with him asking him about this Where what are you thinking about? Artificial intelligence and how an M&A and how that applies and he kind of gave me the same answer he's been giving for the last decade or so when it people ask him about M&A, so we'll make the Decision and we'll make an acquisition if it makes sense if it's additive to or towards our product roadmap Sure perplex you could do that But also part of the product roadmap could just be licensing one of these LLM's that really seems to be the direction They want to go in before spending. I don't even know what it would cost to buy perplexity at least 20 billion or more I mean, I think they're at well above that valuation now. That's a huge chunk of money We should also note that Tim Cook doesn't think this battle is over Scott. He sees it as a much longer term There's a Bloomberg report a couple weeks ago that he's told staff in an all-hands meeting that he thinks the AI race is Still up for grabs and it's still theirs to win So we haven't seen anyone really leapfrog Apple in a meaningful way as far as besides opening I so there is still potentially time for them to figure this out next year

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Tel Aviv-Yafo

Middle East Conflict

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Mason

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Starbase

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Washington

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Council of the City of Sydney

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Texas

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Baltimore

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Kyiv

Ukraine Invasion

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Chicago

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Jerusalem

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Napa Valley

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Sofia

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Maryland

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Los Angeles

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Las Vegas

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Austin

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Apple-Perplexity deal still a 'no-brainer'

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Rise of AI