Apple Won't Actually Buy an AI Search Engine

Rumors have long been circulating about Apple 's possible interest in acquiring companies like Perplexity , which specialize in AI-based search engines , in order to compete with Google and OpenAI . However, Morgan Stanley analyst Erik Woodring was keen to point out that this is a distorted view of things, as the Cupertino giant has no intention of competing in this space.

Apple: No AI Engine on the Horizon

Going into more detail, the analyst emphasized that Apple isn't interested in challenging Google on its own turf, given that competing in the search engine space isn't part of the company's strategy. According to Woodring, "It's misleading to think Apple should acquire an AI search engine."

The report doesn't deny Apple's struggles in the AI space, especially compared to the speed with which its competitors are implementing advanced solutions. However, according to the analyst, the company's approach remains long-term and focused on integrating AI into proprietary devices and services.

The report also anticipates that the September quarter will not bring major changes to Apple Intelligence, but the company's investment in AI capabilities is still a gradual and ongoing strategy, designed to consolidate over time.

In any case, Morgan Stanley expects strong financial results for the third fiscal quarter of 2025, which Apple will report on July 31. Its revenue forecast has been raised to $90.7 billion, representing 5.8% growth compared to last year, citing higher-than-expected iPhone shipments, higher average selling prices, and strong performance by iPads and Macs.

The services division is also expected to grow. According to Morgan Stanley, there are no signs of a slowdown and revenue is expected to increase 11.6% year-over-year.

In the report, Woodring also believes that Apple stock is still capable of outperforming the market. His target price was set at $235, higher than those indicated by HSBC ($220) and JPMorgan ($230).