Forget Big AI: Apple’s Small AI Approach Could Bring Massive Returns for AAPL Stock Investors

At its Worldwide Developers Conference, Apple (NASDAQ:AAPL) stock redefined what artificial intelligence means.

Apple Intelligence is a client-based, voice-activated system that uses all the data you have in Apple systems to organize your life.

It is a contrast to the centralized brute force computing of large databases provided by Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGLE).

Big AI is powerful, providing answers in the form of text, images, videos or codes. But Apple Intelligence is more personal.

Apple stock price

You’re also paying a different price for Apple’s intelligence. With Big AI, Cloud Cars are paying with energy, buying billions of dollars Nvidia (NASDAQ:NVDA) GPUs, which process large data sets.

Apple Intelligence is little AI. Users pay with their data and their privacy. Apple will derive answers from personal data residing in the Apple ecosystem. This means Apple Intelligence is scaled to the digital assets being hosted.

That doesn’t mean Apple isn’t investing in hardware. But most of these investments are near the edge of the network.

The approach allows Apple to increase its dividend and recent stock return without threatening its capital budget.

Apple Intelligence’s announcement surprised those who were betting that Apple would follow its fellow Cloud Cars into the big AI crowd. But Apple was looking for a ring to tie all of its products together.

Siri is the ring that binds them together. Voice will be the interface of the future, not touch. It will integrate all Apple devices, from Vision Pro to Mac, from iPhone to Watch.

On the day of the WWDC keynote, investors looked askance at Apple’s plan. Upon closer examination, they cheered.

Apple stock traded for $192/share during the keynote presentation. It sold for $207 a few days later. That’s a $312 billion “meltdown,” according to Axios.

The real threat

The tight control Apple has over its ecosystem has long been a target of antitrust authorities. It’s a walled garden, the secret to Apple’s big profits, with 26% of second-quarter revenue turning into net income.

A day after the WWDC keynote, four states added themselves to a US Department of Justice lawsuit alleging that the iPhone is an illegal monopoly. Apple believes it is acting in the best interest of its customers’ privacy and security.

This antitrust pushback is happening around the world. Europe fined Apple nearly $2 billion in March, alleging it used its app store to “box” music streaming rivals such as. Spotify (NASDAQ:SPOT).

India is considering a regulatory regime similar to that of the European Union.

The partnership with OpenAI, offering ChatGPT through Apple products free of charge, is also under attack. Apple will provide access to ChatGPT from within its operating system, answering questions that Small AI can’t handle.

Here, again, Apple may be one step ahead of governments. Governments are focused on the iPhone, while Apple Intelligence connects users to a variety of other platforms.

The EU does not even consider Syria an essential platform subject to regulation.

After all

Apple’s WWDC announcements show it’s not only ahead of the industry, but ahead of government efforts to control it.

By focusing and expanding on its customer monopolies, Apple is taking an “asset-light” approach to AI. It’s letting others take on the job of upgrading data centers with expensive Nvidia chips.

Apple is allowing the Large Language Models to evolve, limiting user access to all but OpenAI. I’m using Siri to convince iPhone users that they need the Watch and Vision Pro.

Steve Jobs transformed Apple into a leader in technology. But Tim Cook has done much more to cement Apple’s leadership in society and reward shareholders for it. He may be the greatest legend in the business.

As of this writing, Dana Blankenhorn held a long position in NVDA, MSFT and AAPL. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publication guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of The Big Bang of Technology: Yesterday, Today and Tomorrow with Moore’s Law, available in the Amazon Kindle store. Write it in danablankenhorn@gmail.comtweet it at @danablankenhornor subscribe to his Substack’s free newsletter.