Will Apple’s AI Innovation Outperform Alphabet Over The Next Year?

In the ever-evolving world of technology, major players continue to battle for supremacy. Recently, Apple (NASDAQ: AAPL) stepped up its game with the launch of Apple Intelligence, a feature that integrates Artificial Intelligence (AI) technology into its devices, offering personalised assistance to users.

This innovation comes at a significant time, as the tech giant's strong fiscal results for the second quarter of 2024 are helping alleviate investor concerns about its heavy reliance on iPhone sales and the Chinese market.

Rosenblatt Securities' analyst Barton Crockett praises the tech juggernaut for embedding strong privacy protections within its AI technology. This focus on privacy is not only a top feature that consumers are seeking, but it also gives Apple a substantial opportunity to increase its market share in the field of AI. Reflecting this positive outlook, Crockett has subsequently rated Apple's stock (AAPL) as a ‘Buy'. Furthermore, he has uplifted the price target from $196 to $260, which indicates a significant one-year upside of nearly 13%.

In the other corner stands Alphabet Inc., Google's parent company, which recently rolled out Gemini, its own AI product line. Gemini boasts multimodal large language models expected to refine Google's core functions such as search and translation. However, despite this advancement, Crockett has downgraded Alphabet's stock (GOOGL) to ‘NEUTRAL'. His outlook factors in the uncertainties surrounding AI's impact on search efficiency and the threat of competition with Microsoft's search engine Bing that has integrated OpenAI's technologies.

Alphabet's stock, as per Crockett’s views, is anticipated to see a modest dip of 3.5% over the next twelve months. It isn't just the AI landscape that poses challenges for Alphabet. The company faces a barrage of risks including encroachment from Amazon in the video advertising domain, competitive pressures impacting YouTube's advertising sales, and the prospect of steeper capital expenditure for AI initiatives than previously forecast.

The competition in the tech industry shows no signs of abating, with AI technology being a crucial battleground. Apple's integration of AI in a privacy-centric manner, combined with its strong financial standing, has garnered endorsement from analysts like Crockett. Alphabet, while pushing the envelope with its Gemini product, must navigate through a terrain fraught with competitive threats and uncertainties.