Apple’s ambitious artificial intelligence strategy is facing a crisis, as significant failures to modernize its Siri voice assistant have shaken investor confidence and left the tech giant lagging far behind its rivals ahead of its annual developer conference.
The internal turmoil, stemming from a flawed technical approach to upgrading Siri, directly impacts consumers awaiting a smarter iPhone and has contributed to the company’s stock underperformance in 2025. With competitors like Google and OpenAI accelerating their AI rollouts, Apple is now scrambling to recover from what has become a years-long series of missteps.
A Flawed Foundation
At the core of Apple’s problems was a strategic decision to build its new AI features on top of Siri’s aging infrastructure. A former Apple executive now told the Financial Times it was clear the assistant could not be revamped by simply “climbing the hill” instead of rebuilding it entirely.
The attempt to merge modern generative AI with the old framework was described by one source in a Bloomberg report from May as a “wreck”. This process created persistent bugs, a problem competitors who built their AI assistants from the ground up did not face. The failure has since forced Apple’s Zurich-based AI team to begin a complete reconstruction of the assistant.
The troubled strategy has resulted in a cascade of public delays and embarrassing glitches. The rollout of Apple Intelligence has been sluggish, with the promised AI-powered Siri now delayed indefinitely. Other industry predictions suggest “Siri 2.0” has been postponed until at least next year.
These delays have had real-world consequences with the currently flawed interaction of Siri and Apple Intelligence. Siri has been found creating phantom restaurant reservations for users and Apple has also agreed to a $95 million settlement over allegations involving hidden Siri recordings of users. The setbacks even led Apple to pull television ads promoting the Siri updates, which resulted in false advertising lawsuits.
With its Worldwide Developer Conference beginning today, many suggest Apple will take a modest approach to AI announcements as it works to recover from early stumbles. This comes as the company also faces external headwinds, including a regulatory holdup in China for its AI features, as the Financial Times previously reported.
The internal fallout prompted a leadership shuffle, with AI chief John Giannandrea having the Siri division removed from his remit. A report from Bloomberg’s Mark Gurman claimed Giannandrea was “relieved Siri is now someone else’s problem.” Facing these challenges, Apple is reportedly exploring partnerships, including discussions with Perplexity for search functionalities in Safari.
Investor Jitters And Competitive Threats
The ongoing struggles have made investors nervous. According to Bank of America analysts, Apple is years away from delivering a truly modern AI assistant, placing it far behind competitors. This sentiment is echoed by an analyst at JPMorgan, who noted that investors want to see Apple deliver on last year’s promises before getting excited about new ones.
Meanwhile, a new threat is emerging as OpenAI has signalled its own hardware ambitions, through the recent announcement of the $6.5 billion acquisition of “io,” the design firm co-founded by Apple’s former design mastermind Sir Jony Ive.
The success of this venture will heavily depend on how seamlessly Ive’s design vision can integrate with OpenAI’s advanced AI capabilities and navigate the complexities of mass manufacturing a completely new product category. If proven successful, Apple will have more to care about than just getting Siri right.
