Consumer electronics giant Apple (AAPL) is looking to acquire semiconductor startups to help bolster its artificial intelligence (AI) server capabilities.
News that Apple could be undertaking acquisitions comes as the iPhone maker moves to close the gap with other mega-cap technology companies in the global AI race. Media reports say that Apple has been in discussions with investment bankers and semiconductor startups over the past few months to gauge potential buyout opportunities.
Apple is looking to add more AI capabilities to its devices that also include the iPad and Apple Watch and needs more advanced microchips and semiconductors to accomplish that goal. Currently, Apple relies on its in-house M2 microchips to power AI tasks. However, the company has hit a performance ceiling with its internal servers and is now looking outside for help with its growth.
A Major Change for Apple
The pivot to acquisitions marks a major change for Apple. Historically, Apple has shied away from buying other companies, preferring to make its own technology in-house or contracting it out to third parties. However, the shift in approach is already underway at Apple. Earlier this year, the company spent $2 billion to acquire Q.ai, a startup that makes technology to interpret speech and facial movements.
Apple’s biggest acquisition ever was its $3 billion buyout of Beats Electronics in 2014. To power the Google (GOOGL) Gemini AI model that runs its next-generation Siri digital assistant, Apple has had to outsource to Google Cloud and Nvidia (NVDA) infrastructure. Additionally, Apple’s next-generation AI server chip (code-named Baltra) was slated to debut this year but has reportedly been delayed.
Is AAPL Stock a Buy?
Apple stock has a consensus Moderate Buy rating among 29 Wall Street analysts. That rating is based on 18 Buy, 10 Hold, and one Sell recommendations issued in the last three months. The average AAPL price target of $320.83 implies 2% upside from current levels.
