Can Acquiring Perplexity Help Apple Regain Its Edge in the AI Race?

Apple’s delayed rollout of advanced AI features and a lackluster Siri upgrade have left the company trailing major competitors in artificial intelligence. With its stock down nearly 20% in 2025, Apple is the only member of the Magnificent Seven experiencing a sustained downturn. Analysts and investors are increasingly vocal about the company’s need for a decisive shift in strategy to avoid further erosion of market share and influence.

The urgency is compounded by rapid advances from rivals like Alphabet, Amazon, Meta, and Microsoft, all of whom have aggressively monetized AI and captured investor attention. Apple’s slow pace has impacted its market value and fueled skepticism about its ability to innovate in the AI era. The company’s annual developer conference failed to provide a clear timeline for meaningful AI integration, deepening investor anxiety.

To reverse this trend, analysts argue that Apple must act swiftly and decisively. The acquisition of a high-profile AI startup could signal a renewed commitment to innovation and restore confidence among both consumers and shareholders.

Perplexity’s Technology Offers a Strategic Leap Forward

Perplexity AI, launched in 2022, has rapidly become a standout in the AI search sector. Unlike traditional search engines, Perplexity delivers direct, citation-backed answers using multiple large language models and real-time web crawling. Its platform supports advanced features like document analysis, image generation, and AI-powered browsing, making it a compelling alternative for users seeking more than just links.

The startup’s meteoric growth is evident, with 780 million monthly queries and annual recurring revenue approaching $100 million by mid-2025. Perplexity’s technology could give Apple an immediate boost in AI capabilities, especially in search and conversational interfaces. Integrating Perplexity would allow Apple to enhance Siri, develop a proprietary AI-powered browser, and offer new services that rival the best in the industry.

Industry experts believe this move could fundamentally reshape how Apple delivers information and services, positioning it at the forefront of the next wave of AI-powered consumer technology.

Did you know?
Perplexity AI, founded in 2022, reached a $14 billion valuation in less than three years and now handles nearly 800 million queries per month, making it one of the fastest-growing AI search platforms globally.

Acquisition Could Address Talent Gaps and Regulatory Risks

Internal discussions at Apple, led by M&A chief Adrian Perica and services head Eddy Cue, underscore the company’s recognition of its AI talent and technology deficit. The acquisition of Perplexity would bring cutting-edge technology and infuse Apple with top-tier AI talent, a resource increasingly vital in the current tech arms race.

A successful deal could also help Apple reduce its reliance on Google’s search infrastructure, a partnership that generates $20 billion annually but is now under regulatory scrutiny in the US. Should regulators force a breakup, Perplexity’s technology could provide Apple with a robust in-house alternative, ensuring business continuity and opening new revenue streams through AI-driven search and advertising.

This strategic move would also send a strong signal to the market that Apple is willing to break from its traditionally cautious acquisition approach to secure its future in AI.

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Investor Sentiment Hinges on Bold AI Moves

Analysts from Wedbush and other leading firms have called the potential Perplexity acquisition a “no-brainer” for Apple, arguing that it could immediately reposition the company as a leader in AI. The estimated $25-30 billion price tag, while hefty, is considered a “drop in the bucket” for Apple’s cash reserves and a necessary investment to regain lost ground.

Investors' patience is waning, as Apple's shares remain stagnant or even decline, while competitors experience a surge in optimism driven by AI. The market is eager for evidence that Apple can deliver the “wow” factor that once defined its brand. A high-profile acquisition could provide the catalyst needed for a stock and sentiment rebound, especially as the window to catch up narrows.

Apple’s ability to execute on this vision, integrate Perplexity’s technology, and rapidly deploy new AI features will determine whether it can restore its reputation for innovation and leadership.

The Road Ahead: Risks and Rewards for Apple

While the strategic benefits are clear, challenges remain. Legal risks, including Perplexity’s ongoing copyright dispute with News Corp, could complicate the transaction. There is also the potential for disruption to Apple’s lucrative partnership with Google, which has long made Google the default search engine on Apple devices.

Despite these hurdles, the consensus among analysts is that the rewards outweigh the risks. The acquisition would mark Apple’s largest ever and could fundamentally alter its trajectory in the AI race. With competitors investing billions to attract AI talent and scale up their capabilities, Apple cannot afford to remain on the sidelines.

Should Apple take decisive action, the Perplexity deal could serve as a pivotal moment that restores its competitive advantage and solidifies its position at the forefront of the technology industry.