Apple is the Nokia of the AI age, analysts warn

Things are going from bad to worse for Apple (AAPL) in the AI arms race.

For months, it’s been obvious to industry insiders that the company has fallen far behind its Magnificent Seven peers when it comes to carving out a positioning strategy in the AI market.

Now the gap is widening, and Apple is struggling to even get its flagship product up to speed.

Siri stumble

Apple had promised that the iPhone 16 would debut with Apple Intelligence, its in-house generative AI layer meant to transform Siri into a true LLM-powered assistant. But that promise never materialized.

Instead, Apple quietly confirmed that an AI-powered Siri won’t be ready until 2026.

Critics wasted no time piling on. "Apple is the Nokia of the AI age," said Pedro Domingos, a University of Washington computer science professor and author of multiple AI books.

The jab stings because Nokia’s once-dominant phone business collapsed almost overnight when Apple’s iPhone entered the market.

Others argue the problem is philosophical. Andrew White, co-founder of nonprofit AI group FutureHouse, flagged several papers where Apple researchers questioned the scalability of large language models (LLMs).

"Apple's AI researchers have embraced a kind of anti-LLM cynic ethos," White posted, adding that the company "also has the worst AI products (Siri, Apple Intelligence)."

Talent drain

If internal doubts weren’t bad enough, Apple is bleeding talent. The Apple Foundation Models team — the group tasked with building Apple Intelligence and other core AI tools — has lost around 10 researchers in just the past few weeks, as noted in DealBook.

Morale, insiders say, is falling fast.

Among the exits is Jian Zhang, Apple’s lead AI researcher for robotics, who defected to Meta (META) this week to join its Robotics Studio, according to Bloomberg. But Zhang is hardly alone.

Three more researchers — John Peebles and Nan Du (both now at OpenAI) and Zhao Meng (now at Anthropic) — all left last week. And Ruoming Pang, who ran Apple’s models team, reportedly accepted a $200 million package from Meta.

Yes, Meta is notorious for dangling nine-figure offers, but Apple is losing staff across the board to Google, OpenAI, Anthropic, and anyone further ahead in AI.

Outsourcing AI?

All of which makes the next chapter even more telling: Apple may not even build AI-Siri in-house.

It was revealed last month that the company has approached Google (GOOG) about using Gemini to power Siri. Outsourcing would mark a dramatic shift for a company that prides itself on owning its core technology.

The potential partnership got more oxygen this week after a federal judge cleared Google to maintain its $20 billion deal as Safari’s default search engine.

That means Apple’s Google cash pipeline — a lifeline worth billions each year — is secure. CNBC’s Jim Cramer even suggested on X that the ruling clears the way for Apple to simply buy in AI from Google rather than invest tens of billions trying to catch up.

"I still don't think people understand the incredible importance of tonight's decision for Apple," Cramer wrote. "It will now get the Google money AND instead of buying AI it will have a rich company pay IT to take that company's AI.”

That means no $200 billion check to NVDA for Apple."

Apple’s stock is down 4.8% year-to-date. For a $3 trillion company, that’s not catastrophic. But late AI rollouts, brain drain to rivals, and the looming possibility of outsourcing core technology aren’t inspiring confidence.

That’s not the Apple playbook investors signed up for, and unless Cupertino can show a real strategy soon, the Nokia comparison may stick.