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Elon Musk Clashes With Apple Over AI

Analyst Team trader
Updated 11 Jun 2024

Elon Musk has taken a public stance against tech giant Apple (NASDAQ:AAPL) following its announcement of an AI partnership with OpenAI.

The Tesla (NASDAQ:TSLA) CEO took to social media platform X to issue his warning: he would ban all Apple devices at his companies should Apple proceed to integrate OpenAI technology into its operating systems.

This reaction from Musk came swiftly after Apple's announcement at their annual Worldwide Developers Conference (WWDC). At the event, Apple revealed “Apple Intelligence,” heralding a new era of AI-powered features in its suite. Among these features is a notable collaboration with Microsoft's OpenAI, which is known for its popular ChatGGPU. Apple plans to incorporate ChatGPT widely across its platforms, marking a significant step in embracing artificial intelligence.


Despite the fanfare at WWDC, the launch of the new AI features by Apple did not seem to resonate with investors. Following the announcement, AAPL stock took a downturn, closing 1.9% lower, with the downward trajectory continuing into after-hours trading.

The financial community, aside from reflecting immediate concerns through stock performance, also holds diverse perspectives on AAPL's future. Musk's warning signifies not just a personal or corporate stance but also highlights the increasing tensions in the tech sector regarding the utilization, ethics, and partnerships related to AI technology.

As AI becomes an integral part of operating systems and devices, decisions by leading companies like Apple in partnering with AI-focused establishments like OpenAI could redefine the competitive landscape and possibly set off a domino effect in corporate tech policies.

Musk has also been in the headlines recently over his compensation plan, with some baulking at the $56 billion level. Amidst the intensifying spotlight, Bernstein, a prominent financial research firm, has reiterated its ‘Underperform' rating on Tesla (NASDAQ:TSLA), holding fast to a price target of $120.00 per Tesla share.

Bernstein's analysis suggests that the likelihood of Musk's mammoth compensation package gaining shareholder approval is slim. Historically, Tesla has experienced voter turnout for shareholder resolutions hovering at no more than 63%. Approval of Musk's pay proposal would require an optimistic 75% turnout, a significant surge from past engagement levels. Should the package get rejected, analysts foresee a potential 9% contraction in Tesla's diluted share count, which could bolster earnings per share by around 10%.

However, if shareholders choose to reject the package, Tesla's stock might face a tumble exceeding 5%. This sentiment is anchored in mounting concerns that such a decision could herald Musk's departure from the helm of Tesla, a scenario anxiety-ridden investors are eager to avoid.

Just recently, the Norway sovereign wealth fund, which holds the title of Tesla's eighth-largest shareholder, has publicly declared its intention to oppose the plan.

It remains to be seen whether Musk's threat to ban Apple devices will materialize or if it's a strategic move to influence industry dynamics. Meanwhile, investors and consumers alike are closely observing how these tech titans navigate the new terrain carved out by advancements in artificial intelligence.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.