Apple began its Worldwide Developer Conference (WWDC) yesterday. The annual event attracted a large amount of attention this year in hopes that the company will announce its artificial intelligence (AI) endeavors.

The iPhone maker announced a handful of new features including what it calls “Apple intelligence.” However, the announcements failed to enthuse investors, and Apple shares (NYSE: AAPL) closed in the red yesterday even as the Dow Jones index closed in the green. Here are the key announcements from the WWDC and how analysts reacted to the new features.

Apple Intelligence Versus Artificial Intelligence

Apple is launching its own AI system with Apple Intelligence “that puts powerful generative models right at the core of your iPhone, iPad, and Mac.” According to AAPL CEO Tim Cook, “All of this goes beyond artificial intelligence. It’s personal intelligence, and it’s the next big step for Apple.”

Apple Intelligence would add tons of features to its devices. For instance, it would come with writing improvement features that would help with writing emails and other documents and have a proofread and rewrite feature. Apple will also add summaries in emails and have a smart reply option.

As expected, an image generation feature will be added to Apple iOS. Apple Intelligence can create generative photos based on a user’s phone gallery and would have three styles; Illustration, Sketch, and Animation.

The focus would be on personalization and according to Cook, “Most importantly, it has to understand you and be grounded in your personal context, like your routine, your relationships, your communications, and more.”

There Are Privacy Concerns Over AI

There are some valid privacy concerns over AI as many people are concerned that using AI features sacrifices one’s privacy. The fears were well illustrated when Microsoft revealed its new “Recall” feature for Copilot+ PCs at its Build conference event last month. The feature will retrieve snapshots from the PC’s timeline which was a red flag for many. After much online furor, Microsoft announced that it won’t be a default feature on the device.

Apple perhaps learned from that saga and has said that safety would be the core of Apple Intelligence, even as it delivers personalized experiences. Apple Intelligence would run on several large language models (LLMs) many of which would run on the device itself. According to Apple, in case a request needs to go to a cloud server, it will only send limited data, and that too “cryptographically” to ensure its security.

Apple would use Private Cloud Compute models run on servers powered by Apple silicon, and the company wouldn’t have access to this data.

Users would also have the option to control what data is stored in the cloud and how it can be accessed. As Craig Federighi, Apple’s senior vice president of Software Engineering, said, “We want to extend the privacy and security of your iPhone into the cloud.”

How Is Apple Intelligence Different?

Apple seems to be putting tremendous importance on Apple Intelligence. Cook confirmed its priorities, saying, “We think Apple Intelligence is going to be indispensable to the products that already play such an integral role in our lives.”

To be sure, Apple Intelligence has gone a step further and integrates AI across various apps. It offers some incremental features as compared to what competitors like Samsung and Google are offering. For instance, while image generation based on photos stored on the device was already available on some devices, Apple Intelligences is set to greatly expand the feature set. It gives an option to generate images based on photos of one’s friends and family and use them in messages and emails.

Apple Intelligence also stands out in terms of privacy-enhancing features as the company has addressed many of the fears that users have about the safety of their data while using AI features. Some, namely Elon Musk, aren’t sold by Apple’s statements, however. He is reportedly concerned that Apple will give OpenAI access to user data in some way.

Apple Announced Partnership with OpenAI

AAPL also announced the widely rumored partnership with OpenAI and device users would have the option to tap into ChatGPT while using Siri. While many users might find it a value add, Tesla CEO Elon Musk is not too pleased and has threatened to ban Apple devices at his company if OpenAI is integrated at the operating system level.

Musk is an estranged cofounder of OpenAI but has lambasted it for transforming from a non-profit company to a “maximum profit” company. He has good reason to be upset as he donated tens of millions of dollars before it shifted to a non-profit (meaning that he got absolutely nothing for his money).

The billionaire has started his own AI company which incidentally raised $6 billion late last month which gave the OpenAI competitor a valuation of a mammoth $24 billion.

Jim Cramer Continues to Be Bullish in AAPL Stock

Meanwhile, Jim Cramer was quite impressed with the event and said, “For me, this Apple conference marked the beginning of generative AI for personal use, not corporate use.” He added, “You have enough data in your iPhone that it can make some great predictions and give you great insights about yourself if you let Apple put it to work — it can make your life easier, help you be more creative, make it more fun.”

Ahead of the WWDC, Wall Street analysts were warming up to AAPL stock. Dan Ives of Wedbush Securities recently raised Apple’s target price to $275 as he predicts an iPhone supercycle. Bank of America analyst Wamsi Mohan listed Apple as a top pick while maintaining a $230 target price.

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How Wall Street Analysts Reacted to WWDC?

While the stock market reaction to WWDC was muted at best, brokerages seem quite impressed with the announcements. DA Davidson for instance upgraded AAPL stock to a buy while raising its target price from $200 to $230.

“We believe yesterday’s presentation rhymes with one of Apple’s previous milestone moments — the transition of digital music from a standalone app with questionable regulatory standing (i.e. Napster) to an experience integrated into existing consumer applications (i.e. iTunes),” said the firm’s analyst Gil Luria in a note.

JPMorgan analyst Samik Chatterjee, who previously predicted an iPhone supercycle, admitted that the “absence of any ‘killer app’” at the event dampened sentiments but maintained his overweight rating and $225 target price on Apple.

Citi analyst Atif Malik said, “We believe Apple’s WWDC was the best WWDC conference in a long time as it introduced ‘AI for the rest of the people.”

Goldman Sachs Michael Ng is also positive on the WWDC announcements and said, “We’re encouraged by the financial implications of today’s announcements, with product features that should help to drive upgrade demand for products.”

While markets, in general, are not too enthused by these announcements, investors would now watch how these new features spur the sales of Apple gadgets, especially the iPhone whose sales have sagged in the recent quarter, among others due to increased competition in China.