It's been a tough year for Apple stocks, but AI rumors suggest there may be hope for a rebound.
Apple is the seven worst epic stocks of 2025, falling 20% since the start of the year. In addition to weak iPhone sales and tariff concerns, the company is lagging behind AI races among Mega-Cap technicians.
At Apple's WWDC earlier this month, the company failed to ease Wall Street concerns about Apple Intelligence products, with investors bemoaning the company's lack of new killer apps.
But Apple executives may be keeping an eye on the baffling purchases of AI startups, Bloomberg reported last week. Confusion denied the M&A debate, and Apple declined to comment,
Wall Street didn't ignore the Buzz. Bank of America believes it can throw orders at Apple's failed AI strategy like this.
Potential inventory rebound
According to Bofa, if you can't create your own AI source, it could be your next best option:
In the short term, the bank said, “I think the positive development on the AI initiative is positive for the stocks that are considered AI Laguards.”
Perplexity is an AI-driven search engine that responds to queries with quoted responses, as opposed to Google searches that return links. If completed, the acquisition will provide Apple with a more comprehensive AI offering, instead of building it in-house for many years.
In contrast to a full acquisition, strategic partnerships can help Apple to a lesser extent.
“Such transactions (with no direct knowledge of the probability of such transactions) could be positive for stocks currently in the penalty box, given that Apple is primarily considered an AI lagard (the deep-seri integrated model is slow and no cutting-edge model).
With the acquisition, Apple has access to Perplexity's search and response capabilities, fresh AI talent, product synergy with Siri and other Apple products, and exposure to Nongoogle Search, highlighted by Mohan.
Specifically, confusion could stimulate Siri's ability to struggle to keep up with chatbot development. Confusion can be integrated not only in Safari but also in the entire system, and can also help Apple incorporate AI into services and hardware. All of these factors could potentially get a higher valuation of Apple stock.
Most importantly, the acquisition offers Apple a clear AI strategy and prevents competitors from baffling them.
Acquisition risk
The competition in the AI space is fierce, and Apple certainly isn't just pursuing an M&A or Acquihire strategy. Growing through inorganic means is becoming more common as large tech companies rush to gain market share in the rapidly developing AI industry.
Before Meta invested $14.3 billion in Data Annotation Startup Scale AI, he tried to get another AI startup called Safe Superintelligence.
But that doesn't mean that by locking down hot AI startups like bewildered, it solves all Apple's problems.
Integrating young startups into large, established companies has considerable organizational challenges, and Mohan pointed out some of Apple's previous M&A ventures, such as Siri and Laserlike, as examples of acquisitions that have experienced delays and obstacles.
Apple needs to customize a portion of Perplexity's platform to fit into its existing ecosystem and expand it to Apple's much larger user base. There are legal risks as well. Confusion faces a case of copyright infringement. This must be taken on by Apple in the case of an acquisition.
Also, buying bewildered can put existing partnerships between Apple and Google at risk, creating headwinds towards revenue.
Despite these concerns, Mohan is cautiously optimistic about the return of a potential acquisition. “From a location with a good view of investors, trading offers highly rewarding but risky proposals,” he writes.
“However, in our view, execution is of paramount importance. Apple needs to break in from some of its old habits (siloed development, extreme secrets, slow rollouts) in order to fully utilize Perplexity's fast-paced innovation,” Mohan added.
If completed, the baffling is currently valued at $14 billion, making the acquisition the biggest Apple ever. It also marks a significant departure from the company's traditional free cash flow strategy, which involves repurchase shares and paying dividends.
Bank of America believes that Apple can certainly afford to pay for transactions of this size, as Apple posted a profit of $24.8 billion in the first quarter of 2025.
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“Given the potential for AI transformation, many analysts believe that not investing actively in AI is a huge risk for successful companies like Apple,” writes Mohan.
