A mixed reality headset at an Apple store in New York

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Apple acquired secretive AI facial recognition startup Q.AI for nearly $2 billion, the Financial Times reported Thursday, making it Apple’s largest known acquisition since its purchase of Beats Electronics for $3 billion in 2014.

Buying Q.AI, a Tel Aviv-based company that uses computer vision technology to understand non-verbal cues, marks a clear effort by Apple to catch up to its biggest rivals, like Meta and OpenAI, in an AI hardware race.

Apple is still playing catch-up, after seemingly underinvesting in its AI assistant, Siri, over the years, while competitors grew to unprecedented scales. Last year, the iPhone maker even considered making bids for large language model companies Perplexity and Mistral AI.

For Q.AI and its investors, the sale to Apple is a huge win amid a bifurcated exit environment. At a reported $2 billion price tag, before any dilution, the deal would represent a return of more than 30x in a three-year period for Q.AI’s seed investors, according to PitchBook data, which pegs the startup’s most recent valuation at around $54 million.

Q.AI announced a $24.2 million seed round in early 2023 led by GV, Samsung Next and Exor.

AI wearables have been a tricky category for investors, even as the rest of the industry has not lost any steam. Humane’s AI pin device, which disappointed customers and the market, poured cold water on the sector. Intel acquired Humane’s assets at a major discount last year.

But the tide may be turning. OpenAI, which agreed to acquire ex-Apple design chief Jony Ive’s wearable device upstart for $6.6 billion, says it will unveil its hardware product in the second half of 2026. And just last month, Meta bought Limitless, an AI-powered pendant startup.

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This article originally appeared on PitchBook News