It's been almost two full years since OpenAI released ChatGPT and captured the world's attention overnight. In the months that followed ChatGPT's arrival, Microsoft invested billions into OpenAI, while Alphabet and Amazon each invested in a rival start-up called Anthropic.
Moreover, everyone already knows that Nvidia has been leading the artificial intelligence (AI) revolution thanks to its GPU and data center services. Meanwhile, Tesla is using AI to to build self-driving cars and humanoid robots.
But what about Apple (AAPL 0.85%)? Besides a small-scale acquisition and the introduction of Apple Intelligence -- which has yet to fully scale -- Apple has remained quiet about its artificial intelligence (AI) ambitions.
Below, I will outline my prediction of what Apple may do in order to make a splash in the AI realm and explain how such a move could reignite growth at the company.
NASDAQ: AAPL
Key Data Points
What Apple might do
While Apple could follow in the steps of its "Magnificent Seven" cohorts and explore developing their own chips or building a custom large language model (LLM), I see both of these scenarios as highly unlikely.
Instead, I think Apple is going to make a big-ticket acquisition -- and no, I'm not talking about Rivian Automotive. Rather, I think Apple is going to acquire a medical device company.
Image source: Getty Images.
How could this help Apple's AI strategy?
One area of the AI landscape that I continue to think goes overlooked is healthcare. AI has many applications when it comes to health and wellness, and yet I haven't seen too much focus on this pocket of artificial intelligence yet. Apple, for its part, has shown some interest in health management over the years.
For example, the Apple Watch features numerous health-focused tools including monitoring heart rates, sensing irregular movements or rhythms as it pertains to atrial fibrillation, tracking mobility, and even managing medications.
In addition, the Apple Watch also contains sensors that can monitor sleep patterns. Meanwhile, Apple's AirPods Pro 2 have hearing aid functionality and can monitor noise levels in your environment.
As I wrote previously, Precedence Research is forecasting the total addressable market for healthcare AI to reach $614 billion by early next decade. Precedence cites Internet of Things (IoT) devices such as smart wearables, as well as software and services integrated in these tools are some of the catalysts fueling AI in healthcare.
Making an acquisition in the healthcare space could put Apple in a leading position of an otherwise underserved area of the AI landscape. And considering Apple already has a roster of health-focused hardware, software, and services, I think acquiring a medical devices company to expand its portfolio is a natural complement.
Moreover, should Apple make such a move, consumers who use any of Apple's new healthcare devices will only further be engrained in the company's ecosystem of installed devices.
Why Apple might not do an acquisition
I see a few obvious reasons why my prediction may never come true.
First, Apple is not known for large acquisitions. The company is known for its in-house innovation chops, and has rarely made billion-dollar acquisitions to help spark new growth or augment existing product lines.
Second, Apple's latest device has largely been unsuccessful. Of course, I'm talking about its virtual reality headset, Vision Pro. If Apple were to acquire a medical device company with the intent of bolstering the Apple Watch or AirPods and ultimately fail to do so, investors are going to start wondering if the company's best days of developing industry-leading hardware and software are behind it.
Lastly, Apple's new iPhone literally just hit the market a few weeks ago. The launch serves as Apple's long-awaited foray into the AI market. If initial views of Apple Intelligence are uninspiring, the company will probably be better off improving existing services as opposed to going out and buying another asset that will require hefty integration and product development efforts.
The bottom line
At the end of the day, I think Apple making deeper moves in AI-powered healthcare could be a game changer. But with that said, such an idea is purely speculation on my part. A lot would need to go right for Apple to pull off a move like this, and it's entirely possible that the company doubles down on its already established AI protocols and relies on those to gain market share on industry incumbents.
