Apple Inc (NASDAQ:AAPL, ETR:APC) is reportedly exploring a potential acquisition or partnership with artificial intelligence startup Perplexity AI, in a move that could enhance its AI capabilities and reduce reliance on Alphabet's Google, according to Bank of America analysts.
The investment bank, which maintains a "Buy" rating on Apple with a $235 price objective, said the iPhone maker stands to benefit significantly from integrating Perplexity's technology into its ecosystem, particularly to improve Siri and enter the search advertising market.
“In our opinion, any such deal... would likely be positive for shares that are currently in the penalty box given Apple is largely viewed as an AI laggard,” BofA analysts wrote in a note to clients on Tuesday.
Perplexity AI operates a search engine that provides direct, cited answers to user queries by leveraging large language models (LLMs). Apple has faced criticism for lagging behind peers in AI development, with no major generative AI model released to date and only incremental improvements to Siri.
Bank of America sees strong strategic benefits for Apple in a potential deal with Perplexity AI, including improved AI capabilities, talent acquisition, and entry into the search ad market. However, analysts also warn of integration challenges, legal risks, and possible tension with Google, a key partner.
A full acquisition would be Apple’s largest to date and could raise scrutiny. Yet, the analysts noted that even a partnership could be beneficial: “Apple could also get partial benefit by choosing to go the partnership route.”
While the probability of a deal remains uncertain, BofA believes any positive AI-related developments could lift Apple’s stock, which has underperformed amid rising investor interest in AI leaders.