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   Apple's messy AI win
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   What looked like falling behind now looks smart
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              Tuesday, December 16, 2025
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              <span style="font-family:Arial,Helvetica,sans-serif;font-size:24px;color:#000000">
               What looked like falling behind now looks smart
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              Photo by Cheng Xin/Getty Images
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             <div>
              <span style="background-color:#FFFFFF;font-family:Helvetica 
Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               Apple's AI efforts
              </span>
              <a data-linktext="have been a mess" data-linktype="Normal" style="color:#168DD9;background-color:#FFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:16px;" target="_blank">
               have been a mess
              </a>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               . The company that once defined consumer technology spent 2025 
playing catch-up, delaying promised Siri features and relying on Google's Gemini to fill gaps in its own Apple Intelligence platform. Wall Street
              </span>
              <a data-linktext="punished the stock" data-linktype="Normal" style="color:#168DD9;background-color:#FFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:16px;" target="_blank">
               punished the stock
              </a>
              <span style="background-color:#FFFFFF;font-family:Helvetica 
Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               through the first half of the year as investors worried the iPhone maker had missed the defining technology shift of the decade.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               Then the
              </span>
              <a data-linktext="executive departures started" data-linktype="Normal" style="color:#168DD9;background-color:#FFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:16px;" target="_blank">
               executive departures started
              </a>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               . In one week this month, AI chief John Giannandrea retired after delays made his position untenable, the head of interface design left for Meta, and the company announced retirements for
its general counsel and environmental chief. Dozens of engineers have bolted for competitors.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
              </span>
             </div>
             <div>
              <a data-linktext="OpenAI acquired 
Jony Ive's design studio" data-linktype="Normal" style="color:#168DD9;background-color:#FFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:16px;" target="_blank">
               OpenAI acquired Jony Ive's design studio
              </a>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               for more than $6 billion and has since hired dozens more Apple engineers. Meta used massive compensation packages to poach AI researchers, including the team that worked on Apple's AI models. All this happens as chief executive Tim Cook, who took over from Steve Jobs in 2011 and is now 65,
              </span>
              <a data-linktext="faces growing succession planning discussions" data-linktype="Normal" style="color:#168DD9;background-color:#FFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:16px;" target="_blank">
               faces growing succession planning 
discussions
              </a>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               among analysts and investors.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               And yet Apple's stock
              </span>
              <a data-linktext="has surged about 40% since June" data-linktype="Normal" style="color:#168DD9;background-color:#FFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:16px;" target="_blank">
               has surged about 40% since June
              </a>
              <span style="background-color:#FFFFFF;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;color:#000000;font-size:16px">
               , giving the company a $4.1 trillion market cap second only to Nvidia. Meta and Microsoft have watched their stocks slide despite pouring billions into AI infrastructure. Apple is 
now the second most expensive stock by forward P/E ratio in the Magnificent Seven, trailing only Tesla.
              </span>
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                  Sponsored
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                   Find out why 100K+ engineers read The Code twice a week
                   <span class="ql-cursor">
                    
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                 <div>
                  Staying behind on tech trends can be a career killer.
                 </div>
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                 <div>
                  But let’s face it, no one has hours to spare every week trying to stay updated.
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                  <br/>
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                 <div>
                  That’s why over 100,000 engineers at companies like Google, Meta, and Apple read The Code twice a week.
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                  Here’s why it 
works:
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                  <a data-linktext="Join 100,000+ engineers who read The Code to stay ahead of the curve." data-linktype="Normal" style="color:#4C84AA;text-decoration:none;" target="_blank">
                   Join 100,000+ engineers who read The Code to stay ahead of the curve.
                  </a>
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             <div>
              <strong style="font-size:20px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               Apple is playing a different game
              </strong>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <strong style="font-size:20px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
              </strong>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               What looked like falling behind now looks smart: Apple skipped the AI 
arms race and the massive spending that comes with it. Instead,
              </span>
              <a data-linktext="at WWDC" data-linktype="Normal" style="color:#168DD9;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFF;" target="_blank">
               at WWDC
              </a>
              <span style="color:#000000;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               earlier this year, the company announced the Foundation Models framework, which lets 
developers access Apple’s on-device AI with just three lines of code.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               This could supercharge AI adoption by solving three problems. API costs make AI features prohibitively expensive for smaller developers. Requiring an internet connection limits where and when AI features work. And companies worry about liability and data security when sending user information to the cloud. Apple's on-device 
approach eliminates all three barriers, potentially unlocking widespread AI adoption that hasn't materialized despite billions in investment.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               Apple's 3 billion parameter model can't compete with frontier systems like GPT-4, which is rumored to be over a trillion parameters. But that misses the point. With more than a billion iPhone users and millions of developers in its App Store ecosystem, 
Apple is betting that widespread access to decent AI beats having the most powerful model that few can afford to use. Even if Apple's current AI models are inferior to OpenAI's or Google's, enabling millions of developers to experiment with free, on-device AI could generate the breakthrough applications that Apple hasn't been able to create internally.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               Apple is betting it can win AI the same 
way it won mobile. The company doesn't need the most powerful AI models if it has the best AI apps. Millions of developers experimenting with on-device AI could make the iPhone the best place to experience AI. And it's significantly cheaper than building AI models that might be obsolete by next quarter.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               As
              </span>
              <a data-linktext="one portfolio manager told Bloomberg" data-linktype="Normal" style="color:#168DD9;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFF;" target="_blank">
               one portfolio manager told Bloomberg
              </a>
              <span style="color:#000000;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               , Apple has "kept their heads and are in control 
of spending, when all of their peers have gone the other direction." Investors increasingly question
              </span>
              <a data-linktext="whether AI investments will pay off." data-linktype="Normal" style="color:#168DD9;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFF;" target="_blank">
               whether AI investments will pay off.
              </a>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica 
Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
              </span>
             </div>
             <div>
              <strong style="font-size:20px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               The chaos might be overstated
              </strong>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               Some departures were overdue. Giannandrea's exit acknowledges what many knew about Apple Intelligence's struggles. Others could be upgrades, like the
              </span>
              <a data-linktext="new head of interface design" data-linktype="Normal" style="color:#168DD9;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFF;" target="_blank">
               new head of interface design
              </a>
              <span style="color:#000000;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               who has a background in the field replacing someone who came from fashion and advertising. And others seem to be just bad timing 
for the news cycle not signs of fleeing a sinking ship, like the general counsel and environmental chief retiring after long tenures.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               The talent losses are real, particularly in AI research, where Meta and OpenAI are aggressively recruiting. But Apple confirmed this week that Johny Srouji, whose teams developed the M-series processors and in-house cellular modems,
              </span>
              <a data-linktext="is staying, despite rumors" data-linktype="Normal" style="color:#168DD9;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFF;" target="_blank">
               is staying, despite rumors
              </a>
              <span style="color:#000000;font-size:16px;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               he was considering leaving.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
              </span>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               Apple still faces real challenges. The company hasn't launched a successful new product category in a decade. Its AI products have disappointed. Leadership transitions create uncertainty when it needs to prove it can compete in the AI era.
              </span>
             </div>
             <div>
              <br/>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               But Cook remains in control, the executive team is being refreshed with internal talent, and the company isn't overpromising on AI features it can't deliver. Whether Apple's measured approach proves correct depends on execution.
              </span>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
              </span>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               But for a company supposedly in crisis, the market is betting on stability.
              </span>
             </div>
             <div>
              <span style="font-size:16px;color:#000000;font-family:Helvetica Neue,Helvetica,Arial,sans-serif;background-color:#FFFFFF">
               —Jackie Snow, Contributing Editor
              </span>
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