Why Apple is important today? Trust. Nobody can trust OpenAI boss. Everybody, who worked with him, agree that he isn't a very good person. Some consider him useful for them still. Apple is the only one, who is selling phones, not our most intimate information to anybody with a big bag of money. Trust is the main thing that is interfering with broad implementation of AI today, interfering with the big profits for AI companies.
"Apple reported revenue reached a record high for the September quarter, propelled by a modest rebound in iPhone sales that came ahead of its release of new artificial-intelligence tools.
For Apple's fiscal fourth quarter, total sales were $94.9 billion, beating the $94.5 billion analysts were expecting, according to FactSet. Net income fell around 35% to $14.7 billion due to a judicial ruling in Europe that will force Apple to pay more than $14 billion in taxes to Ireland.
Apple shares fell in aftermarket trading by nearly 2%. The company said it expects revenue in the December quarter to grow in the low- to mid-single digits. Analyst projections for sales growth in that period are 6.6%, according to FactSet.
The launch of Apple Intelligence, a heavily advertised set of AI tools, has prompted a rally from investors who hope the features will lead users to upgrade their smartphones. Apple's iPhone business, which accounts for around half of overall sales, had sales of $46.2 billion. The results represent a turnaround from the first half of the year, when smartphone sales were sluggish for consecutive quarters.
In China, where competition intensified after domestic smartphone champion Huawei released a high-speed phone, Apple's revenue reached $15 billion for the region, a slight decline from the same period last year and nearly 6% below analyst expectations.
Apple's peers reported strong results this week. Microsoft and Google parent Alphabet posted double-digit revenue growth due in large part to rising demand for their AI-powered cloud services. On Wednesday, Meta Platforms logged record quarterly sales, fueled by strength in digital advertising. Amazon.com rose by more than 4% in after-hours trading after beating Wall Street expectations, with demand rising for its cloud services and e-commerce sales.
"There's an underappreciated demand," he said. "It's super encouraging to see this growth in advance of the AI features fully launching."
But these big tech players, including Microsoft and Meta, faced wary investors after reporting rising spending on the AI boom. Although quarterly sales increased markedly for both companies, their shares fell in after-hours trading Wednesday, underscoring the demand among shareholders for better returns on billions of dollars in spending for new AI products and services.
The growth in iPhone sales was a positive surprise and indicates that people with iPhones that were three to four years old are ready to upgrade, said Charles Rinehart, chief investment officer at Johnson Investment Counsel, an Apple shareholder.
Apple has taken a more cautious approach compared with Microsoft and Meta, increasing operating expenses at a far slower rate this year, according to FactSet data.
In September, Apple released its iPhone 16 lineup, which it said would enable a personalized and more private AI system than from others.
The new AI features are available on the latest phones and the previous generation's iPhone 15 Pro, potentially encouraging a new wave of demand. The last big upgrade cycle for the iPhone was in 2021, when many carriers were subsidizing new phone purchases to get users on 5G-enabled devices.
Early demand signs for the iPhone 16 have been mixed. In the first eight days of sales for the iPhone 16 in the September quarter, sales were better than the same period last year for the iPhone 15, said Apple Chief Financial Officer Luca Maestri.
New iPhone 16 models accounted for 20% of U.S. iPhone sales in September, down from a 29% share in September 2023 of the iPhone 15 lineup, the latest at the time, according to Consumer Intelligence Research Partners. In China, the first three weeks of sales for the iPhone 16 did better than the prior year's iPhone 15 launch, according to Counterpoint Research. But stronger sales in China might not last because of recent smartphone launches from domestic Chinese vendors, the research firm cautioned.
The new AI features aren't available in China, and in the U.S., none was available when the devices went up for sale in September. The first batch of features were released earlier this week -- summarizing notifications, rewriting text and cleaning up photos -- though people first had to get on a wait list to access them. Apple said other features, including an integration with OpenAI's ChatGPT, would be coming later.
Apple plans to be careful as it launches the new tools, and executives have said the company is focusing on privacy and responsibility first.
"This is a big lift," Craig Federighi, Apple's software chief, recently told The Wall Street Journal. "You could put something out there and have it be sort of a mess. Apple's point of view is more like, 'Let's try to get each piece right and release it when it's ready.'"
Users have upgraded to the new iPhone operating system faster than last year in order for them to access Apple Intelligence, said Maestri.
"There is a lot of interest from our customers to get onto the new software so they can experience the intelligence features," said Maestri.
For Apple's biggest new product in nearly a decade, the Vision Pro headset, sales have been slow with its high $3,499 price tag. A cheaper version is expected as soon as next year." [1]
1. iPhone Sales Boost Apple to a Record. Tilley, Aaron. Wall Street Journal, Eastern edition; New York, N.Y.. 01 Nov 2024: A.1.
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