Apple’s AI Catch-Up Play Could Pull It Out of the ‘Penalty Box’
Apple Inc. has had a turbulent first half of the year, with its stock down more than 19% amid mounting investor concerns. Tariffs introduced during former President Donald Trump’s administration continue to cast a long shadow, and fears that Apple is lagging behind in the artificial intelligence race have only deepened the gloom.
But the tide may be turning.
Recent reports suggest Apple is in talks to acquire AI startup Perplexity, a search-focused chatbot platform powered by multiple large language models. Though no deal is final, the news signals that Apple may be ready to get serious about AI—and investors are taking notice. Shares of Apple have climbed 2.4% since the headlines broke on Friday.
Apple has drawn criticism for being slow to integrate AI, especially as competitors like Microsoft and Google move swiftly to embed intelligent tools into their platforms. Its delays in rolling out “Apple Intelligence” and ongoing limitations with Siri haven’t helped. A recent TD Cowen note proposed that a partnership or acquisition could be Apple’s best bet to close the AI gap. Now, that theory is getting tested.
Bank of America analysts framed the potential Perplexity deal as a “positive for shares currently in the penalty box,” referencing Apple’s diminished standing among investors as an AI underdog.
Why does this matter? Because confidence in Apple’s ability to build its own robust AI tools has taken a hit—especially after the company announced it would rely on OpenAI to power certain features. In a further twist, OpenAI recently acquired Jony Ive’s AI hardware startup, stirring speculation that Apple’s former design genius might now help a rival create AI-native devices.
Analysts warn that as AI-driven behavior becomes more central to consumer tech, Apple’s elegant hardware may no longer be enough to hold user loyalty. Baird tech strategist Ted Mortonson has cautioned that AI tools could eventually reduce the need for traditional smartphones altogether—posing a long-term risk to Apple’s core business. Even Meta’s smart glasses could become viable alternatives, he notes.
If it were to acquire Perplexity, the benefits could be significant: a direct line to in-house AI capabilities, reduced reliance on external partners like OpenAI, stronger Siri and search integration, and access to new AI engineering talent. There’s even the potential for new revenue through search-based ads.
Still, Bank of America analysts stress that such a move wouldn’t be without risk. Integrating outside technology into Apple’s tightly controlled ecosystem can be tricky. Perplexity’s data sourcing practices could spark legal concerns. And consumer reception is never guaranteed. Not to mention, this would be its largest acquisition to date—adding another layer of complexity.
Despite the uncertainty, Bank of America has set a $235 price target on Apple shares—about 16% above where the stock currently trades. The FactSet analyst consensus is slightly lower, at $228.
The bottom line: Apple may finally be taking meaningful steps to shake off the “AI laggard” label. But whether it can turn interest into impact—and market dominance—remains to be seen.
