For over a decade, Apple was the largest company by market cap—before Microsoft grabbed the top spot in January 2024. Apple is a trendsetter in technology and represents almost 6% of the S&P 500. But Apple stocks have underperformed in 2024—down 8% to the market’s 11% gain.

Apple has fallen behind in AI to the likes of Microsoft, which has already integrated generative AI into its products through Copilot. Apple’s recent performance drop is a signal that the market is focusing on the AI narrative. Apple’s approach to integrating AI across its products and services is on-device, private, and user-focused.

In March 2024, Apple released its potentially game-changing AI research, named ReALM [Reference Resolution As Language Modeling]. ReALM can help an AI assistant, similar to Apple’s Siri, break down everything on a screen to text, to contextually understand what’s on your phone screen—including apps and buttons on-screen. This would enable users to be more intuitively assisted by Siri in natural language.

An example of ReALM-assisted Siri is detailed below by The Neuron:

User: “Hey Siri, find me all the clothing sales going on.”

*Siri displays a list on your screen.

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User: “Are they open right now?”

*Siri (using ReALM) would look at:

  1. The list of shops and their details on your screen.
  2. The previous request for clothing sales, providing context for “they”.
  3. The current time (say, 6:30 PM on a weekday).

*Siri says “Macy’s and Gap are open until 9 PM, but Nordstrom closes at 7PM.

User: “Call them.”

*Siri (using ReALM) would look at:

  1. The displayed list of shops and their contact details.
  2. The conversation history about store hours, narrowing “them” to Macy’s and Gap.
  3. Your preferences or prior actions (if known) to identify who “them” refers to.

Potential use cases for ReALM tech include:

According to The Neuron, retailers could use ReALM-like systems to guide users to relevant products based on what they are currently viewing. ReALM could also enable customer service AI chatbots to help users navigate apps and content based on what is on their screen. ReALM can improve accessibility by allowing visually impaired users to navigate apps and websites by translating screen content to plain text.

Apple’s ReALM research will progress how digital assistants interact with us in natural language, by remembering indirect pronouns and other references. ReALM can improve conversation flow by converting what appears on your screen into text, without the need for advanced image recognition, used by OpenAI’s GPT-4 model. ReALM also improves privacy and security as it can run on-device without sending data to the cloud. The advent of context-aware AI assistants could also help reduce frustrated human outbursts, like when Siri queues the wrong song…

AI is currently used across Apple’s ecosystem: including Face ID to securely authenticate users, and the camera, which uses smart HDR and night mode to enhance image quality in challenging lighting conditions. And Apple has been quick to use AI to increase the personalisation of their user experiences such as suggesting apps, songs, and content based on user preferences and behaviour.

In March 2024, Apple acquired Canadian AI startup DarwinAI.​ DarwinAI has expertise in making AI models smaller and more efficient, which is of interest to Apple as it likes to run AI models on-device as opposed to in the cloud for better privacy. Apple is reportedly now in talks with Alphabet to integrate Google’s Gemini LLM, released December 2023, into its products.

In a move to make AI the centrepiece of its business, iOS 18, expected to be released at the Worldwide Developers Conference (WWDC) in June 2024, will update the iPhone, including Siri, with advanced AI capabilities.​ Apple’s ReALM research will disrupt the AI market; however, it faces a civil antitrust lawsuit by the United States Department of Justice, accusing it of monopolising the smartphone market. It will be interesting to see if Apple can successfully defend itself against mounting antitrust challenges, boost its earnings growth to overtake Microsoft again, and take back the top spot it recently lost to Samsung as the world’s largest smartphone maker. If Apple is to flip the narrative, let’s hope it will be for the good of the realm.