A nearly 3-year-old AI startup has reportedly caught the attention of two of the largest and most influential tech companies, underscoring the fierce competition for AI talent and push to become leaders in what some believe will be the next major evolution of the internet.

The interest from both Silicon Valley giants raises an important question: why are they eyeing a much smaller company like Perplexity?

Apple's potential buyout of Perplexity could boost its AI presence, diversify revenue, and address regulatory risks. See why I maintain a Hold rating on AAPL.