Apple Inc. (AAPL) may be unmatched in consumer hardware, but when it comes to artificial intelligence (AI), the tech giant has lately ceded ground to several of its top rivals.

But Apple has shown a willingness to open up its wallet to catch up. In the last two years, Apple's priciest acquisitions have involved AI startups, according to CB Insights. The company acquired Lattice Data Inc. in May 2017 and Turi Inc. in August 2016, each for $200 million. 

Before that, Apple's biggest deals reflected the company's strategic evolution from computers to mobile. As the smartphone market has matured, however, tech industry watchers and investors have sought to predict where Apple might be headed next. 

The answer seems to lie in emerging technologies such as AI, augmented reality and virtual reality. Aside from Apple's Siri virtual assistant, however, the company appears to have made relatively little headway in entering the AI space. 

"Apple has ceded ground in the fields of machine learning, natural language processing and more to Alphabet Inc.'s (GOOGL) Google, Amazon.com Inc. (AMZN) and others," CB Insights wrote in a Tuesday report. "Apple also has a relatively weak patent portfolio in this area." 

Google, in particular, has made major strides in bringing advanced machine learning capabilities to smartphones through its open-source TensorFlow software. Sundar Pichai, Google's CEO, has also pledged that Google would shift from being a mobile-first company, to an "AI-first" company, emphasizing products such as its voice-activated smart speaker, Google Home

Apple's acquisition of Lattice Data and Turi, both for $200 million, were primarily made to boost its AI capabilities.
Apple's acquisition of Lattice Data and Turi, both for $200 million, were primarily made to boost its AI capabilities.

Amazon got an even earlier start into AI through its line of Echo AI-powered smart home speakers. The company has also incorporated a host of machine learning features into its popular cloud computing platform Amazon Web Services. 

In response, Apple has turned to M&A to make up for lost time, completing 11 AI-related acquisitions in the last five years, CB Insights said. In 2016, Apple hired its first-ever director of AI research, Ruslan Salakhutdinov, who authored the company's only white paper on AI. 

The company also designed its own AI chip, the Neural Engine, which is housed inside its A11 Bionic chip and speeds up speech and data processing in iPhones. That's something rivals Google and Amazon don't have, the firm noted. 

"More could be in the works," CB Insights added. 

Outside of AI, Amazon has used M&A to bolster its 3D sensing, semiconductor and mapping technologies, among other areas. Its $3 billion acquisition of Beats Technologies in 2014, its largest deal to date, was used to help boost Apple Music.

Apple and Alphabet are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells APPL or GOOGL? Learn more now.

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