Apple Just Delivered Bad News for OpenAI and Anthropic, but Alphabet Could Be a Winner

Apple's (NASDAQ: AAPL) Worldwide Developers Conference (WWDC) is an annual tech playground for developers, where they get to see and experience new technologies and designs. It's where Apple generally unveils its latest upgrades and new products, and some years offer more than others.

The event has become so synonymous with Apple's place in technology that its stock tends to fall or rise after the event, depending on what it releases. For the past two years, the market has been expecting significant artificial intelligence (AI) developments from Apple's Apple Intelligence, but it hasn't been satisfied, and the stock has dropped.

Image source: Apple.

However, this year's updates might spell bad news for OpenAI and Anthropic, more than for Apple. Here's why it could hurt them, and why Alphabet could come out a winner.

Siri AI

The star of this year's WWDC was undoubtedly the revamped Siri, or Siri AI. Apple has been planning to launch a new, AI-powered Siri for two years with various delays, but the new interface and features are finally coming to market.

Time will tell if users love them, but Apple is touting their high-level capabilities. In some ways, they mimic any standard large language model (LLM) like OpenAI's ChatGPT or Anthropic's Claude. Siri is a conversational chatbot that can answer questions and provide many agentic AI abilities, like checking messages and fixing images.

Where it differs is where its edge is. It's always on and can be accessed on an iPhone by swiping down, but it also has a dedicated app where conversations live. Apple is known for its strong emphasis on user privacy, and Siri can access your Apple-connected accounts and devices to assist you. For example, Apple says that "users can ask Siri to find a restaurant recommendation a friend messaged them about, surface a hotel confirmation number from an old email, or pull up photos with friends and family from a recent trip."

Is it ever enough?

The market found these updates mediocre, as evidenced by a 5% drop in the stock. But remember that the same thing happened last year, and Apple stock is up 45% since then, while the S&P 500 has gained 25%.

It may be worse news for companies like OpenAI and Anthropic, which make money from selling premium subscriptions to their LLMs. These capabilities are integrated into Apple products that support Apple Intelligence without any subscriptions or payments.

Apple has 2.5 billion actively used devices, providing its AI access to a massive user base. When this group starts using Siri AI, it may no longer need any other LLMs. Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) stands out because it's partnering with Apple to provide its Gemini LLM as the foundation model for Apple Intelligence. Apple's ability to provide these services to its device users depends on a $1 billion annual payment to Alphabet.

Anthropic's target customer is commercial, with a business-to-business model, while OpenAI's target market is broader, but it's worth noting how the stakes are changing as both companies prepare to go public.

Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.