Apple Considers AI Search Amid Declining Safari Usage

In recent developments, Apple is exploring the integration of AI into its search functions, signaling a shift that could challenge major tech companies.

This week, Apple executive Eddy Cue shared insights during the Justice Department’s antitrust case against Google’s parent company, Alphabet. Cue stated that Apple is “actively looking at” implementing AI as a search alternative.

According to reports, a pivotal reason for this shift is reflected in the numbers; search activities on Apple’s Safari browser experienced a decline last month for the first time. Cue attributed this decrease to users increasingly utilizing AI tools, as noted by Bloomberg News. Google reportedly pays approximately $20 billion each year to remain the default search engine on Safari.

Following Cue’s testimony, Alphabet’s shares dropped 8% on Wednesday, highlighting concerns about the potential impact of AI on its search dominance.

While numerous discussions about AI’s role as a disruptor in various industries, including tech, have emerged, another significant aspect is coming to light this week.

Many predictions portray AI as transforming the American workforce. Microsoft founder Bill Gates recently forecasted that advancements in AI could make human involvement in many tasks minimal in the near future. However, that reality remains a work in progress.

A January survey by Pew Research found that only about 16% of American workers are currently using AI in their jobs, while 63% reported limited to no AI integration in their work. Additionally, 17% indicated they had not heard of AI being applied in their workplace.

This suggests that while AI is on the horizon, widespread adaptation is still a ways off.

The Unstoppable AI Shift

While headlines about AI’s potentials generate excitement, the Pew Research findings indicate that we are far from widespread adoption of AI technologies.

Investors like Ray Dalio, founder of Bridgewater Associates, have cautioned about a potential “AI bubble,” likening it to the dot-com bubble burst. Similarly, Jeremy Grantham, co-founder of GMO LLC, has suggested the likelihood of an eventual “deflation.”

While these outcomes are plausible, one truth stands clear: the traditional economy is gradually giving way to an AI-driven landscape.

Investors will need to adapt or risk becoming obsolete.

Investment expert Louis Navellier emphasizes this notion in his communications to Growth Investor subscribers.

At the time of ChatGPT’s initial launch, its capabilities were limited to existing training data, which dated back to September 2021. Furthermore, it often generated inaccurate information, a phenomenon we now refer to as AI “hallucinations.”

Despite these limitations, it quickly drew over 1 million users within the first five days.

As of March 2023, GPT-4 emerged, demonstrating remarkable skills, such as passing the bar exam with a score in the 90th percentile, and outperforming medical students in assessments.

The acceleration of AI technology continues, leading us to what I term the Economic Singularity.

This denotes a critical point where AI renders the majority of human labor economically irrelevant.

Readers of the Digest know that Louis employs data-driven methodologies to pinpoint superior investment opportunities backed by institutional interest.

An example of this approach is reflected in the earnings report from AppLovin Corporation (APP) released this week.

This company targets over 1 billion mobile gamers, operating an AI platform specializing in targeted advertising.

Notably, their platform has also expanded into sectors such as e-commerce, fintech, healthcare, and entertainment.

AppLovin reported impressive earnings this week. Louis highlighted in Growth Investor:

Shares of AppLovin Corporation (APP) surged last Thursday following a strong earnings report for the first quarter. Revenue climbed 40% year-over-year to $1.48 billion, surpassing estimates of $1.38 billion. Advertising revenue alone jumped 71% year-over-year to $1.16 billion.

Additionally, first-quarter earnings soared 144% year-over-year, totaling $576.42 million or $1.67 per share, compared to $236.18 million or $0.67 per share during the same period last year. Adjusted earnings per share were reported at $2.38, exceeding expectations of $1.96 per share, resulting in a notable 21.4% earnings surprise.

Emerging Opportunities Beyond Tech Stocks

On Thursday, Bloomberg reported on the growing need for data centers that support AI in areas struggling with water scarcity.

These data centers require substantial water resources for cooling and energy generation, a challenge in regions where water is limited.

Even prior to the launch of ChatGPT in late 2022, local communities expressed concerns about data centers consuming millions of gallons of water daily in areas already facing shortages. This issue has intensified as AI demand surged post-ChatGPT.

According to an analysis from the World Resources Institute and market research firm DC Byte, over 160 AI data centers have been established in the U.S. in the last three years, representing a 70% increase from the previous three-year span.

The report outlines how tech companies are beginning to address these logistical challenges while acknowledging that demand for data centers will continue to rise.

This trend highlights investment opportunities that extend beyond data center construction, as identifying future economic needs remains vital for successful investors.