Apple Shares Fall as Musk Criticizes AI Partnership

Apple shares dropped during premarket trading on Tuesday following the company’s unveiling of “Apple Intelligence” at its annual WWDC event. This long-awaited insight into Apple’s vision for artificial intelligence confirmed a rumored partnership with ChatGPT creator OpenAI, drawing criticism from Tesla CEO Elon Musk.

Apple shares decreased by 0.83%, reaching $191.51 during premarket trading on Tuesday morning. This decline continued from the previous day when Apple shares fell nearly 2% to $193.12 during regular trading. Wall Street’s tepid reaction came after CEO Tim Cook revealed the company’s strategy to integrate generative AI across its products at the Apple Worldwide Developers Conference 2024 (WWDC 2024).

Despite being a leading technology firm, Apple has been perceived as lagging behind competitors like Google and Microsoft in developing and deploying generative AI tools like ChatGPT. This year, Apple’s shares have remained relatively flat compared to the rising values of its AI-focused rivals. The recent drop in stock price reversed some gains made in anticipation of the AI announcement, with shares having climbed roughly 14% since early May.

At the event, Apple revealed plans to integrate OpenAI’s ChatGPT into its flagship devices under the “Apple Intelligence” umbrella. Additionally, Apple announced software updates for the iPhone, allowing greater customization, and upgrades to its Vision Pro mixed-reality headset.

The partnership with OpenAI to enhance products like the voice assistant Siri has been long anticipated in Silicon Valley. Reports and speculation about an impending deal to put ChatGPT on iPhones had circulated for weeks before the event. However, this development earned the ire of Elon Musk, who criticized the partnership as a “security violation” and threatened to ban Apple devices from his companies if the integration occurs at the operating system level. Musk, in a series of social media posts, expressed concerns about user privacy and criticized Apple’s security measures. “They’re selling you down the river,” he asserted.

Musk’s threat extends to visitors at his companies—including Tesla, SpaceX, Neuralink, and others—who would have to check their Apple devices at the door if Apple proceeds with its plans. These devices would be stored in a Faraday cage to prevent any potential data leaks.

Recently, Musk raised $6 billion in funding for his AI startup, xAI, bringing its valuation to $24 billion. Originally a cofounder of OpenAI, Musk has since distanced himself from the company over disagreements about its profit-oriented approach and AI risks.

Apple did not specify when the new features announced at WWDC 2024 will be available to consumers. This news highlights the mixed reactions from Wall Street and notable tech figures regarding Apple’s foray into AI, suggesting a cautious outlook from investors and significant industry debate over the implications of its OpenAI partnership.