Apple Stock: Potential Perplexity Acquisition Could Be a Lifeline for Struggling Shares

Apple is reportedly considering a potential acquisition of AI startup Perplexity, which could be a major turning point for the company's struggling stock. The tech giant has been the worst-performing Magnificent Seven stock in 2025, with shares down 20% year-to-date. Weak iPhone sales and tariff concerns have contributed to the decline, but the company has also lagged in the AI race among its mega-cap tech peers.

At Apple's WWDC earlier this month, the company failed to ease Wall Street's concerns about its Apple Intelligence product, with investors bemoaning the lack of a new killer app. However, a potential acquisition of Perplexity could provide a lifeline for Apple's AI strategy and turn the stock around.

Perplexity is an AI-powered search engine that responds to queries with cited responses, as opposed to a Google search that returns links. If completed, the acquisition would provide Apple with a more comprehensive AI offering instead of building one out in-house over years. A strategic partnership, as opposed to an outright acquisition, could also help Apple to a lesser degree. Any such deal would likely be positive for shares that are currently in the penalty box given Apple is largely viewed as an AI laggard (deep Siri integration delayed and no cutting edge models).

An acquisition would give Apple access to Perplexity's search and answering capabilities, fresh AI talent, product synergies with Siri and other Apple offerings, and exposure to non-Google search. Specifically, Perplexity could revitalize Siri's capabilities, which have struggled to keep up with developments in chatbots. Perplexity could also be integrated with not just Safari but also system-wide, helping Apple build AI into its services and hardware.

However, competition in the AI space is fierce, and growing through inorganic means is becoming more common as Big Tech companies scramble to grab market share in the rapidly developing AI industry. Integrating a young startup into a larger, more-established company comes with its fair share of organizational challenges, and Mohan pointed to some of Apple's previous M&A ventures, such as Siri or Laserlike, as examples of acquisitions that experienced delays or roadblocks.

Despite these concerns, Mohan is cautiously optimistic on the payoff of a potential acquisition: "From an investor's vantage point, a deal would offer a high-reward but high-risk proposition." However, execution is paramount: Apple would need to break from some of its old habits (siloed development, extreme secrecy, slow rollout) to fully capitalize on Perplexity's fast-paced innovation.

If completed, the acquisition would be Apple's biggest ever, as Perplexity is currently valued at $14 billion. It would also be a marked departure from the company's traditional free cash flow strategy of conducting stock buybacks and paying dividends. Bank of America believes Apple could certainly afford to shell out for a deal of this size, as the company posted profits of $24.8 billion in Q1 2025. A Perplexity deal would signal to investors that Apple is willing to shift its capital allocation strategy to compete in the AI race.

In conclusion, while an acquisition of Perplexity could provide a lifeline for Apple's struggling stock and AI strategy, it also comes with its own set of risks and challenges. However, with the transformative potential of AI, many analysts believe that not investing aggressively in AI is the bigger risk, even for a company as successful as Apple.