Apple's AI Future

In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• Elon Musk suing Apple.
• Apple's AI future with Siri and potential acquisitions.
• The government's Intel stake and (potential) defense deals.
• Fox vs. YouTube TV.

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This podcast was recorded on August 27, 2025.

Travis Hoium: Is the government going to take a stake in Intel? Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoium joined by Lou Whiteman and Rachel Warren. Today we are going to talk about the government potentially taking a stake in Intel, Fox fighting with YouTube. But we're going to start with Elon Musk and Apple. Elon Musk can't seem to stay out of the news for long in this time because he's suing Apple, claiming they're preferencing OpenAI over Grok. Rachel, is this a big deal here? It seems like Elon Musk has to sue everybody in the AI world? Is he just trying to promote Grok? Is there a there with Apple preferencing OpenAI and ChatGPT?

Rachel Warren: Honestly, I think I want to start with this. For Apple investors like myself, I think this is a nothing burger. We know that Apple has not been the AI growth play that maybe some investors had hoped. I do not think that AI is the reason you invest in Apple at this juncture, in my opinion. I do think it's partnership with OpenAI makes sense. I mean, we know that Apple has been falling behind in the generative AI race, and we've been hearing for a long time now them talking about using third party models to bring Siri's capabilities forward closer to competitors and really update it for the next generation of users. But I want to talk a little bit about the details of what's happening here with this lawsuit. Musk's xAI is suing Apple and OpenAI in Texas. Musk is alleging that the partnership to integrate ChatGPT into Siri, as well as Apple's writing tools, that it stifles competition. He's alleging that it harms the public interest, that it gives OpenAI on unfair advantage by providing access to billions of user prompts from iPhones. The lawsuit also targets OpenAI for allegedly betraying their non-profit mission. You know, remember, Musk co-founded OpenAI with Sam Altman back in 2015, and OpenAI has actually said in the past that Musk wanted OpenAI to be a for profit entity and that he was actually pushing for, control over the company and a majority equity stake for that for profit structure, and then later changed his mind. for its part, Grok continues to be embroiled in its fair share of controversies. I do think that there is a point to be made. OpenAI retains major control of the LLM space, but Grok has some systemic engineering failures from what we can tell that have made it a far less attractive option for tech companies than OpenAI. This is a nothing burger for now.

Lou Whiteman: To be fair here. Elon isn't the first to say that Apple's putting fingers on the scales for the app store. This is something we've heard before. But that to me is the not interesting part of this complaint. The complaint goes far beyond the App Store. Quite frankly, it sounds like a rant, not a lawsuit. Elon's complaining that Apple and AI are basically so afraid of this Grok super app that's the reason he bought Twitter and the reason he did all this, that that super app is going to just destroy our need for a smartphone that they are conspiring to keep Grok down.

Travis Hoium: Couldn't it just be the case, Lou, that people prefer ChatGPT to Grok? Wouldn't that come out in discovery? That's the weird thing here is he's opening account warns that the answer may not be good for Grok and for X.

Lou Whiteman: There's good reason. A, OpenAI was the first out there. If there is a verb in this space, it's ChatGPT, so they have just that incumbent advantage with better name recognition. Also, Rachel hinted this Grok has had some, should we say, very well publicized less than ideal outcomes, which I do think me as a consumer, makes me a little weary of using Grok. I think there are legitimate reasons why it may not be top of the charts right here. Bigger issue for me here, and I think that it's what's going underneath there is, what is the difference between OpenAI and Grok and Gemini and all that. It might be a matter of having that placement and the apps are important because I think, I worry with these companies that we are getting to a point where if this AI works the way it should and it seems to be moving in that direction, what's going to be the difference between them? What's going to be something that compels you to buy one other than the other? How do they differentiate themselves? In that world, where you are in the app store rankings really matter. I think that if Elon is showing his cards, maybe that's what he's admitting that we're heading toward maybe commoditization?

Travis Hoium: Then it becomes a distribution game. Then I think you do start to, yes app store ranking matters, but it also matters what you're integrated with. You mentioned Gemini. Gemini has announcements seemingly every day with all new companies, so they do have good models. They obviously Google has a huge Cloud service. But if Gemini is going to be integrated into Google Docs and YouTube and Mail and Android, these are going to be huge advantages for a company like that. Grok is trying to ride X, but X is still Lou a pretty small social media service. This is not Meta with billions of users. This is a couple hundred million users. I think you and I are very active, but there's not a lot of us out there. It is a pretty limited business. If that's your distribution model, there are going to be bigger players out there.

Lou Whiteman: There is, of course, the Tesla question too, right now, and we'll see how long it takes. But there's just a lot going on behind the scenes with Grok. Like you said, Elon likes to sue people. I'll be curious what becomes of this, but it does feel like, to me, again, just frustration with market share in a world where, as you say, distribution, market share, eyeballs might be the differentiator, not the tech.

Travis Hoium: Other big news item for the week in this space with these companies in particular is Apple potentially looking at buying Mistral and Perplexity. That has been the rumor recently. Reports have surfaced that Gemini could eventually power Siri. That's coming from Google. Apple has not gotten their AI strategy right so far. Siri is something that's been out for what a decade now. Rachel, is Apple coming at this from a desperate position, or are they playing 40 chess and letting the market play out before they make a big move, which is what they did with the iPhone.

Rachel Warren: I do think that their strategy as an AI play has not been fully coherent so far. I do think that this is still a company that at its core, this is a smartphone, hardware focused business. You're not investing in Apple because of its AI prowess at this point. I do think that's been a disappointment for some investors. I think there are a lot of people who have watched the different AI related announcements Apple's made in the last few years and had hoped for more right now. For me as a shareholder, the thesis still holds for me about this business. This is a tech leader with a very powerful, sticky ecosystem that drives user loyalty. We continue to see really strong growth in other services like it's asset light services business. But the acquisition of a company like Perplexity, for example, Perplexity has an advanced AI powered search engine and natural language capabilities that could really boost Apple properties like Siri, and that could really improve as well their AI platform and user experience. Apple also receives billions annually for Google to be the default search engine on its devices, and acquiring Perplexity could provide something of a homegrown alternative and a strategic fallback if they were to have their current deal disrupted by, say the antitrust lawsuits facing Alphabet's Google now. I don't think there's any secret that Apple has been perceived as trailing rivals like Alphabet, Meta, and Microsoft and the AI space. I think that's a reality that they are contending with. Acquisitions would certainly be a bold strategy to try to catch up and provide a more significant AI platform. They could attract more developers and users and really keep them within the Apple ecosystem. One other thing that I think is important to note, CEO Tim Cook has really positioned Apple's commitment to consumer privacy as a core value for the business under his tenure, and that really creates a need for near perfect accuracy in consumer facing applications. I think that's also underscored some hesitancy to release what could be potentially imperfect AI features. They have a long road to go where this is concerned. Perhaps a series of acquisitions could be the best route for them.

Travis Hoium: Lou is acquiring your way into this business going to be even feasible? These are huge companies, but it may be the only way for Apple to go.

Lou Whiteman: First of all, I don't want to rewrite history here. I'm had it with this four dimensional tress thing. Yes, they did it with the iPhone, but Apple we can't give them a pass. They tried, they spent a lot of money and they failed in developing their own AI. To date.

Travis Hoium: By the way, a lot of the people that have been hired by Meta in particular over the past couple of months used to work at Apple.

Lou Whiteman: We'll see if that's good or bad. But look, let's not rewrite history. They tried. That said, I don't know if they need to have spent all that money. I don't even know if they need to buy something big. Back to my commoditization talk from before, I believe in AI and I believe it is going to change things. But I believe that there are a number of companies that are spending a really big sum of money to get it right. I don't know if Apple needs to be one of them. Just as with search, Apple owns the customer. I talked about before, distribution might be what matters. I think what Apple has, the customer, that will end up being more important than owning the AI. We know for years Google spent billions to have its search attached to the iPhone. I think we could have a similar world here. I think Apple's definition of winning here is different than the others. Apple's definition of winning is AI boosts iPhone sales and causes a generation of upgrades. They are well positioned to do that right now, despite their failures, despite not having bought any one. I think both, yes, they failed, and they'll be just fine.

Travis Hoium: The bigger risk is going to be if there is some new hardware paradigm, which we don't yet see in artificial intelligence, so we'll see how that plays out. Next up, we're going to talk about the government potentially taking a stake in not only Intel, but defense companies you're listening to Motley Fool Money.

Welcome back to Motley Fool Money. One of the big news items on the market over the past week has been the US government agreeing to take a stake in Intel. Intel actually announced this, but the Trump administration floated the idea a couple of weeks ago. It seems like there's at least an agreement in place, Lou, what do we know? Why is this a groundbreaking agreement between the government and a private company?

Lou Whiteman: I love you saying that they agreed to. There's a lot going on here, and is it groundbreaking? We've seen this before, like in the great financial crisis. The thing that's weird here is that it's going back and rewriting history 'cause this is all tied to the Chips Act, and the Chips Act is already law. Under the Chips Act, Intel got grants and loans, and we're basically now just after the fact saying, actually we want equity instead. It's problematic in a way.

Travis Hoium: For Intel, they're not getting any more money than they previously were?

Lou Whiteman: No.

Travis Hoium: What's the advantage for Intel?

Lou Whiteman: The advantage to Intel is it gets the government off their back. I think if we're honest. That's why it's problematic to me because look, if Intel was on its way to hitting the milestones needed to earn these grants, then it's the government going back on its word. If they weren't it feels like new legislation would be needed to change the terms. We didn't see any of this. I will say that I'd be more worried if they did this without the cover of the Chips Act because I think with the Chips Act is actually, at least we can say this is normal. This isn't just randomly going out and taking a stake in a company. But it does add another layer of uncertainty. Intel holders were just deluded by 10% overnight. As a stock investor, I don't want to see this become common practice. I don't think we're there yet, but I'm at least weirded out by it.

Travis Hoium: Rachel, what was your takeaway?

Rachel Warren: There's a lot to unpack here. As Lou alluded to, this deal with Intel essentially converted about $9 billion in federal grants into an equity stake. We also had comments the other day from Commerce Secretary Howard Lutnick, which confirmed that the administration is considering taking equity stakes in defense contractors like Lockheed Martin. You know, there's some major concerns I have on these fronts, but we're here to unpack really the investment angle. I will focus on that. The government's significant stake in Intel or other companies if that happens in the coming weeks and months, it does minimize the influence of existing shareholders. Speaking to Intel specifically, government involvement could shift Intel's focus from, say, pure profit driven goals to more national security driven objectives. You could also see an environment where a government stake subjects Intel to new or additional regulations and restrictions in other countries. Intel's own filing notes that the government stake could deter third parties from engaging with the company in some cases, and that could obviously potentially affect future financing and strategic partnerships. Of course, probably one of the most obvious concerns here is that the government's interests, whether it pertains to national security or economic policy, might not always align with the financial interests of private shareholders. It could mark a move toward a more state engaged economy. It is a significant change from a purely capitalist model, and one has to wonder, could this set a precedent for future government intervention in private industries? That would alter corporate governance models.

Travis Hoium: That remains to be other big takeaway here, there's some intel specific parts about this deal. Lou, you mentioned that with the Chips Act. But the idea of taking a stake in defense companies that don't have the same funding and grants behind them, that could be really a game changer for these companies, the way that we think about them as investments. Hat can of worms are we opening up here, Lou?

Lou Whiteman: This scares me, and I should say that part and parcel for the defense contractors is, please the customer. That's how this industry works. I've long argued that the defense contractor, their core competency is understanding how the government works better than most companies. There is an instinct, if asked to do it. You could easily see almost a pay for play world, like we just had the Boeing, Lockheed bake off for a new fighter jet. What if there's a world where one of those companies said, not only will we offer you this price, but we'll give you a 10% stake? As an investor, that is not a path I want to go down. I'm hoping cooler heads will prevail. I don't think there's much of a case for them coming in after the fact, saying we're going to take stakes. I think that that would get into litigation. You wouldn't have the cover of the Chips Act, but we really need to think through where we're going here because it would honestly for me, change the dynamics of potentially investing in these companies if that is part of the bid process.

Travis Hoium: No doubt the courts are going to weigh in here, so a lot to come, but this is a new piece of the investing world that we'll have to deal with. When we come back, we're going to talk about the latest battle in TV in the future of streaming you're listening to Motley Fool Money.

Welcome back to Motley Fool Money. Now, every media company is trying to build their own streaming app, and Fox is no different, but they're a little later than most. The company recently launched Fox One, which is the stand-alone property. But they have also picked a fight with YouTube TV, one of the biggest virtual cable companies. Ahead of the football season, Fox may not be on YouTube TV. Lou, is this a big deal, and is Fox playing a hand that is even worth playing at?

Lou Whiteman: Yes. They are playing the football hand. It's the oldest card in the book. America loves its football, so this is when they have leverage. I'll say, as a YouTube subscriber who's not really into it, YouTube's offered ten bucks back if it doesn't come through. I'm rooting for that, Travis, but I know I'm in the minority here. I think YouTube for that reason that we we want our football and so they have to have it. But I'll tell you, I do think I'm ready to move past these dramas. I'm afraid that what comes next is worse. You have the ESPN stand-alone with ABC. Fox has the stand-alone. Peacock, Paramount gets the NBC and CBS. All the networks are covered as a consumer, we're heading toward the most terrible future where paying separately for everything, having to leave an app and go into an app just to change the channel. I'm going to hate this. We Roku. Everybody needs to rethink things. But I do think that this is just the old try and true playbook and it'll probably work as it always does, and I'll just end up paying more.

Travis Hoium: This is one of those situations where we've now started to do the math on Is it worth canceling YouTube TV and just subscribing to every single one of these apps.

Lou Whiteman: Let me know because I'm going to do that, but I'm too lazy. Let me know.

Travis Hoium: Rachel, what's the future here for Fox in particular? Because they do have football. They do have their own streaming service, but Fox News and football is a strange combo in a world where the alternatives seem more compelling.

Rachel Warren: I think in the short term, looking at it from a consumer perspective and investment perspective, YouTube probably is going to cave. I do agree with Lou on that front. But I think as you look over the long term and you look at these different platforms, I think YouTube and YouTube TV remain supreme, you think about how YouTube, including its live TV service, captures the largest share of total TV viewing in the US. It consistently holds the top spot and has for the last six consecutive months as of August 2025, that's based on reports from Nielsen ratings. It's the largest contributor to overall streaming growth. It's a formidable player in the market. Obviously, Fox has some major cards to play. If its channels are removed, you know, from YouTube, that could happen by end of day today if a deal is not reached from this carriage dispute. But looking at it as an investor in a company like Alphabet, as I'm, it's also the case that platforms like YouTube are fundamentally changing the business model of entertainment and content creation, and that is a reality that is not going anywhere.

Travis Hoium: I don't know if Fox versus YouTube is going to be really a fair fight, but we'll see how much power football has here. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool's editorial standards. It is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and our production magician Bart Shannon the entire Motley Fool team, I'm Travis Hoium. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.

Lou Whiteman has positions in Lockheed Martin. Rachel Warren has positions in Alphabet and Apple. Travis Hoium has positions in Alphabet and Intel. The Motley Fool has positions in and recommends Alphabet, Apple, Intel, Meta Platforms, and Tesla. The Motley Fool recommends Lockheed Martin and recommends the following options: short August 2025 $24 calls on Intel and short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.