Frustrated Wall Street analysts want Apple to buy Perplexity. It’s reportedly planning to beef up Siri to beat it instead

Apple is reportedly overhauling Siri with large language models to launch an AI-powered "World Knowledge Answers" search feature by early next year, pursuing an asset-light, on-device processing strategy. This internal development comes despite significant Wall Street pressure, led by Wedbush's Dan Ives, for Apple to acquire AI search engine Perplexity (valued at $18-20B) to accelerate its AI capabilities, especially as Apple remains the sole Magnificent Seven stock with a negative year-to-date return amid a surging AI market.

Analysis

Apple is at a strategic crossroads in the artificial intelligence sector, opting for an internal overhaul of its Siri assistant rather than pursuing a major acquisition as advocated by Wall Street analysts. The company is reportedly developing an AI-powered search feature, dubbed “World Knowledge Answers,” for a potential launch by early next year, representing a complete rebuild of Siri using large language models. This approach aligns with Apple's traditional "asset-light strategy," prioritizing on-device processing and selective partnerships to maintain user privacy, in stark contrast to competitors' massive investments in cloud infrastructure. This perceived caution has contributed to Apple's stock underperformance; it is the only Magnificent Seven stock with a negative year-to-date return, down approximately 2.5%, while peers like Nvidia and Microsoft have surged. The performance lag has intensified pressure from analysts, notably Wedbush’s Dan Ives, who are urging Apple to acquire AI search engine Perplexity—valued at $18-20 billion—in a deal that could cost around $30 billion to immediately bolster its competitive standing against Google.

Key Decisions for Investors

• Investors should closely monitor execution on Apple's internal AI roadmap, as the success of its revamped Siri and 'World Knowledge Answers' will be critical to justifying its deliberate strategy and reversing its stock's underperformance relative to AI-focused peers.
• A potential acquisition of a company like Perplexity would signal a significant pivot from Apple's current 'asset-light' strategy and could act as a major short-term catalyst, warranting a re-evaluation of the company's growth trajectory.
• Given Apple is the primary laggard among Magnificent Seven stocks due to its perceived AI gap, holding the position is a bet on its long-term, integrated ecosystem approach eventually triumphing over the market's current preference for rapid, infrastructure-led AI deployment.