Apple shares started trading higher after Bloomberg reported the tech giant is working on its own generative AI tools. Yahoo Finance Tech Editor Dan Howley breaks down the report.

Video Transcript

BRIAN SOZZI: Shares of Apple higher today on a report that the tech giant is working on its own AI chat bot to rival ChatGPT. Yahoo Finance's Tech Editor Dan Howley is here with more. Dan, so is Apple, I guess, the new Nvidia tech play here, is that serious on what they're working on?

DAN HOWLEY: It's hard to tell, right? So this is from Mark Gurman, who again, lives underneath Tim Cook's mattress or in his walls. I don't know what he's done, but he's doing it. And this is basically a kind of technology called Ajax. And this is basically what he says is the foundation of an AI software.

So it's not necessarily that they have a ChatGPT rival going, though, the report says that they are building one or are working on one internally. There's questions about how this would even work for a company like Apple. They don't have a search engine that this would fit into nicely. They have Siri, but Siri is just kind of been hanging out. They're not doing a whole heck of a lot or even that good. So I don't know, like, what this would slot into.

And the other thing to take into account with something like this, and I know, you know, obviously, investors are excited about it, not to throw cold water on it. But because of the kind of languishing that Siri has done and the fact that they don't have something where this really kind of fits in, you would think that this technology would slot in silently behind the scenes to power some of its other software, right, and that's a very Apple move. They wouldn't say.

And I kind of I've written this a few months back, where if you listen to last earnings season, every company seemingly on their earnings call was just AI was, like, 30 something times that Microsoft mentioned it, 20 something times Meta, 30 something times with Alphabet. I forget the exact numbers, but Apple mentioned it twice. And that's only because someone asked a question of it.

So the big thing for Apple is-- and I know this is kind of, like, leading into their favorite words, magical and whatever. But they really do like to put the technology behind the scenes so that you're just working with the product. And so I don't think that despite them working on this, we're going to get a huge, you know, this is our AI play. They're going to have a product that this works with and will likely work well outside of Apple Maps when it first launched. Although supposedly very good now.

I do think, though, it's going to be something that's more of a backseat driver than something where you can go, they're in AI, yeah, and get all pumped. So don't expect ChatGPT or Apple GPT is this piece refers to it as.

SEANA SMITH: Yeah, we'll see. You got to think that at least one analyst is going to ask about maybe this report specifically or what those ambitions do look like for AI.