Even though Warren Buffett has long avoided the technology sector, apple (AAPL 0.53%) The largest holding in the conglomerate he heads, berkshire hathaway. No, the Oracle of Omaha wasn't funneled into his iPhone maker because of the hype surrounding artificial intelligence (AI). Buffett has owned Apple since 2016, long before the AI story took shape.
But over the past year, many of Apple's biggest technology companies. microsoft and alphabet, has made significant progress in AI. While the Windows developer and internet search giant has made some public announcements about his AI ambitions, Apple has remained silent.
Holding back is pretty standard for Apple, but this time it felt a little different. Amid growing skepticism in some quarters that Apple may have missed the boat on his AI journey, recent details about the company's plans have emerged from a Bloomberg report.
Below, we dig into how Apple is pursuing AI and assess what this means for investing in the stock.
slow and steady wins the race
Microsoft has kicked off the AI race by investing billions of dollars in OpenAI, the startup behind ChatGPT. Since this investment, Microsoft has quickly integrated his ChatGPT into applications related to the entire Windows operating system, especially Microsoft Office and the company's Azure cloud platform.
alphabet and Amazon Companies quickly followed Microsoft's lead and made splashy investments in an OpenAI competitor called Anthropic. This is not at all surprising, considering that Alphabet and Amazon each compete with Microsoft in cloud computing.
But Apple, a latecomer to the cloud revolution, has remained suspiciously quiet amid the AI investment frenzy.
Image source: Getty Images
Is Apple moving too slowly?
Apple has not publicly revealed its AI vision, but Wedbush Securities Wall Street analyst Dan Ives theorized that the company could leverage AI capabilities into the App Store. There is. Earlier this month, investors got at least a small preview of how Apple will move into AI. The company has acquired a Canadian startup called DarwinAI, which develops technology to identify defects in hardware devices during manufacturing.
Ives' theory that Apple could rely on AI for future growth in the App Store suggests the company's ability to ensure the quality of its hardware device line, which has seen growth shrink over the past year. It makes sense to strengthen it. After acquiring Darwin AI, a report published by Bloomberg suggested that Apple was in talks with both Alphabet and OpenAI about the possibility of running generative AI models on the iPhone.
pay attention to details
I didn't expect Apple to work with Alphabet or OpenAI. The company is perhaps best known for its constant commitment to product innovation. For this reason, we develop technology in-house and use a closed system with almost no outsourcing. This is why I'm in disbelief about a potential deal with Alphabet and OpenAI.
It may sound overly dramatic, but I think this is a make-or-break scenario for Apple. All of its leading technology companies are making breakthroughs in AI. This has left Apple with an unenviable game of catch-up as growth stagnates.
Collaborating with other AI companies may just be a fantasy. What I'm saying is that partnerships could be a way for Apple to stay involved in the conversation until it develops an actual strategy.
This is why I see this current investment in Apple as a potential generational change. It's very difficult to compete with a company that has such a rich history of integrating software and consumer electronics. If Apple uses its strategic relationships with other AI developers as a catalyst for more meaningful breakthroughs in the future, it could be the first chapter of a long-awaited comeback story.
However, with the stock trading at 26 times forward earnings, Apple stock is more expensive than Alphabet or Apple Inc. S&P500. Why do investors pay a premium over the broader market and other established AI players, especially for companies that aren't growing and don't appear to have concrete plans? I don't understand why you should pay.
But given Apple's long-term success, I'd like to keep my doubts in check for now. I'm cautious about buying the stock at its current valuation, but I'd equally like to know more about its potential ties to rival platforms. A smart strategy is to stay tuned for further details surrounding Apple's AI roadmap and assess stock price volatility on any news.
If you're more confident in Apple's moves as it relates to AI, it may be worth buying up the stock and holding it for the long term.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Adam Spatacco has held positions at Alphabet, Amazon, Apple, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
