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Apple Reportedly Acquires Xnor.ai to Boost On-Device AI

Zacks Equity Research

Apple AAPL recently acquired Xnor.ai, a Seattle-based artificial intelligence start-up per a GeekWire report. Xnor.ai specializes in low-power edge-based tools that allow AI to operate on devices like smartphones, cameras, and drones, rather than in the cloud.

Per the report, Apple spent around $200 million on Xnor.ai, which was spun out of the Allen Institute for Artificial Intelligence or AI2, created by Microsoft MSFT co-founder Paul Allen.

Apple uses AI across its software, allowing for search on devices and features like Siri. The employees brought to Apple as part of the Xnor.ai deal will likely be based in Apple’s Seattle offices.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus
Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

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Apple to Benefit From Xnor.ai’s Expertise

Xnor.ai’s technology could be used to improve Apple’s deployment of AI stored locally on devices or to power edge computing in Apple’s Core ML 3 toolkit for app developers.

With a chip dedicated to executing machine learning workflows, Apple intends its devices to operate independent of the cloud for such tasks as facial recognition, natural language processing, and augmented reality.

In 2017, Xnor.ai started the process of making machine learning algorithm highly efficient to run on lowest tiers of hardware without requiring a supercomputer or a powerful processor or connection to the cloud.

The company also specializes in image recognition software that can even run on low-powered devices. This is expected to enhance performance on Apple’s devices and save battery consumption.

Moreover, Xnor.ai's technology will also help Apple to continue to promote data privacy on the iPhone. With the newly purchased tech, Apple is likely to better secure the data generated by the use of AI applications on the iPhone and off the cloud.

Further, Apple’s camera software, which makes extensive use of machine learning algorithms for capturing and processing images could potentially be made much lighter with the inclusion of Xnor.ai’s economizing techniques.

Apple’s interest in more efficient AI models complements Xnor.ai’s focus to drive innovation, reduce costs and reduce carbon footprint in the coming years.

In May 2019, Xnor.ai launched AI2Go, a platform that lets developers and manufacturers optimize prebuilt AI models for on-device AI. Moreover, the company further demonstrated its edge-computing capabilities by deploying a deep-learning algorithm with a small solar panel without requiring a battery or other power source.

AI Gaining More Importance at Apple

Apple’s initiatives and acquisitions focused on infusing AI and machine learning in its solutions and devices are noteworthy. In recent months, Apple bought smartphone camera software company Spectral Edge and struck a deal with graphics company, Imagination Technologies.

Per a CBInsights report, from 2010 through 2019, Apple acquired 20 AI-related companies, ahead of 14 purchased by Alphabet’s GOOGL Google and 10 bought by Microsoft.

Competitors like Facebook FB are also resorting to acquisitions to expand their AI talent and new technology fairly often. Facebook recently spent between $500 million and $1 billion on neural monitoring startup CTRL-labs.

Zacks Rank

Apple currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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