Here's what Tim Cook thinks about AI replacing the iPhone
During Thursday's earnings call, Wamsi Moen, an analyst with Bank of America, asked Cook directly how Apple is preparing for a world where dependence on screen-based devices "significantly diminishes," thanks to advances in AI.
Cook didn't seem to see an imminent threat to Apple's hero product.
"When you when you think about all the things an iPhone can do, from connecting people to bringing app and game experiences to life, to taking photos and videos, to helping users explore the world and conduct their financial lives and pay for things and so much more, you know, it's difficult to see a world where iPhone's not living in it," Cook said.
"And that doesn't mean that we are not thinking about other things as well," Cook added, "but I think that the devices are likely to be complementary devices, not substitution."
While Cook didn't appear worried about advances in AI disrupting the tech giant's business, Apple has been slow to release new Apple Intelligence features, leaving analysts with mixed opinions about its competitive edge.
EMARKETER analyst Jacob Bourne told Business Insider that, "while the AI arms race may pressure Apple toward bolder moves, including potential acquisitions, its disciplined approach to product quality over speed should help it maintain a competitive advantage in the premium market over the long haul, provided it makes the necessary R&D investments in AI."
Wedbush analyst Dan Ives said in a research note after the call that the company's revenue beat was "a major step in the right direction," adding that "now it's time to address the elephant in the room...the AI strategy, which remains absent while the rest of the tech world is laser focused on the AI Revolution at warp speed."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
4 minutes ago
- CNBC
Jim Cramer attributes market resilience to Big Tech's earnings success
CNBC's Jim Cramer reviewed Monday's market action and told investors that stocks' rebound from last week was lead by positive news from the Magnificent Seven Tech stocks — Microsoft, Meta, Amazon, Apple, Alphabet, Nvidia and Tesla. "Now, some of that may be because…the Fed has to cut, maybe even before September — I mean, that's how weak the employment numbers are," he said. "But at the heart of the market's resilience is, well…the Magnificent Seven." The indexes closed in the red on Friday as investors worried about a much weaker-than-expected labor report and President Donald Trump's modification of "reciprocal" tariffs on a number of countries. But stocks reversed course on Monday, and the Dow Jones Industrial Average jumped 1.34%, the S&P 500 added 1.47% and the Nasdaq Composite surged 1.95%. The market doesn't seem to be concerned that Trump suddenly fired the Bureau of Labor and Statistics Commissioner, Erika McEntarfer, and accused her of manipulating jobs data, Cramer said. Many of stocks that had been strong on Thursday but sank on Friday proceeded to recoup their losses during Monday's session, he pointed out. Cramer reviewed recent earnings from the tech titans, starting with Microsoft. He called the quarter "flawless," saying the company seems to be doing well in every segment of business. He noted that its cloud infrastructure division, Azure, saw a huge acceleration in growth. Cramer was also impressed with some figures from Meta's recent report, especially management's claim that 3.5 billion people use at least one Meta product a day. Alphabet is seeing success throughout the company, Cramer said, including its Google search business, Youtube and AI product, Gemini. He also said the Waymo business is building a nice lead over the rest of the autonomous vehicle space. Apple had a "tremendous" report, Cramer continued, emphasizing its better-than-expected growth. He was encouraged by management's comments on artificial intelligence innovations in the future. Amazon also did well, Cramer continued, with good results from retail sales and advertising revenue, as well as decent numbers from the web services division. While Cramer said Tesla's vehicle business is poor, he said it's doing very well as a tech company. He suggested it's worth owning for its autonomous driving and robots. Although Nvidia has yet to report, Cramer expressed optimism about the chipmaker and demand for its products. "Even though the Mag Seven has one hand tied behind its back with Tesla, we had tepid reactions to Apple and Amazon's numbers," he said. "The fact is that these companies, loaded with cash, not outrageously expensive — nation states, I call them — with multiple revenue streams and tight expenses, just can't be beat by any stretch of the numbers or the imagination." Click here to download Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest The CNBC Investing Club Charitable Trust owns shares of Nvidia, Meta, Microsoft, Apple, Amazon and Alphabet.
Gizmodo
33 minutes ago
- Gizmodo
Apple CEO Tim Cook Calls AI ‘Bigger Than the Internet' in Rare All-Hands Meeting
In a global all-hands meeting hosted from Apple's headquarters in Cupertino, California, CEO Tim Cook seemed to admit to what analysts and Apple enthusiasts around the world had been raising concerns about: that Apple has fallen behind competitors in the AI race. And Cook promised employees that the company will be doing everything to catch up. 'Apple must do this. Apple will do this. This is sort of ours to grab,' Cook said, according to Bloomberg, and called the AI revolution 'as big or bigger' than the internet. The meeting took place a day after Apple reported better than expected revenue in its quarterly earnings report, and that sent the company's stock soaring. The report came in a week already marked by great tech earnings results, partially driven by AI. But unlike Meta and Microsoft, Apple's rise in revenue was attributable to iPhone sales and not necessarily a strength in AI. In the earnings call following the report, Cook told investors that Apple was planning to 'significantly' increase its investments in AI and was open to acquisitions to do so. He also said that the company is actively 'reallocating a fair number of people to focus on AI features.' Cook echoed those sentiments in Friday's meeting, saying that the company will be making the necessary investments in AI to catch up to the moment. Apple has been working on integrating advanced AI into its product lineup for the past year or so under its Apple Intelligence initiative, which the company unveiled at the June 2024 Worldwide Developers Conference. The move was met by celebration and criticism even then: Apple's big bet on AI was coming a good year or so after competitors like OpenAI, Google, Microsoft, and Meta scaled up their offerings. Even so, the company's progress on Apple Intelligence has been slow. Apple was supposed to unveil an AI-enhanced Siri earlier this year, and even released ads for the new iPhone with AI-enhanced Siri capabilities, but the Cupertino giant pushed that reveal back at the last minute, reportedly to next spring, though nothing is officially confirmed. The switch-up caused major backlash from investors and customers, two major lawsuits, and a complete corporate overhaul. Cook said on Friday that 12,000 workers were hired in the last year, with 40% of them joining research and development teams. The leadership overhaul following the fallout of LLM Siri has 'supercharged' the company's work in AI development, senior vice president of software engineering Craig Federighi said at the meeting. According to Federighi, the main problem with the LLM Siri rollout was that Apple tried to build a 'hybrid architecture' that utilized two different software systems. That plan has now been scratched, and Federighi seemed confident in LLM Siri's future this time around, claiming that the new 'end-to-end revamp of Siri' will now be delivering 'a much bigger upgrade than we envisioned.' Also key to the new AI strategy, according to Cook, is chip development. Apple has been working on designing in-house AI chips for some time now, according to a Wall Street Journal report from last year, in a project internally code-named ACDC (standing for Apple Chips in Data Center). The tech giant has reportedly teamed up with Broadcom to develop its first AI chip code-named Baltra, according to a report last year in The Information, and Apple is expecting to begin mass production by 2026. Despite being a global leader in tech and a household name in consumer electronics, Apple is nowhere near the top when it comes to the AI race. But while that scares some Apple fans and investors, others think it's actually kind of on-brand. Tim Cook indicated Friday that he belongs to the latter camp. 'We've rarely been first,' Cook said at the meeting. 'There was a PC before the Mac; there was a smartphone before the iPhone; there were many tablets before the iPad; there was an MP3 player before iPod.' Cook has a point. Apple isn't necessarily known for spearheading new technology, but the company's strength comes from perfecting said technology and making products that become highly dominant in their respective markets. And if Apple makes the right moves in developing and scaling its AI product offerings, Cook could potentially add AI to that list as well.
Yahoo
an hour ago
- Yahoo
Apple revenue forecast beats estimates, tariff costs projected at $1.1 billion
By Stephen Nellis and Akash Sriram SAN FRANCISCO (Reuters) -Apple forecast revenue for the current quarter ending in September well above Wall Street's estimates on Thursday, sending shares up despite a warning from CEO Tim Cook that U.S. tariffs would add $1.1 billion in costs over the period. As the centerpiece of U.S. President Donald Trump's trade war, those tariffs cost Apple $800 million in the June quarter and spurred some customers to buy iPhones in late spring this year. Those purchases helped Apple's fiscal third-quarter sales beat expectations by the biggest percentage in at least four years, according to LSEG. The company still forecast growth, though, with Chief Financial Officer Kevan Parekh saying the company expects revenue growth for the current quarter in the "mid to high single digits," which would exceed the 3.27% growth to $98.04 billion that analysts expected, according to LSEG data. Apple reported $94.04 billion in revenue for its fiscal third quarter ended on June 28, up nearly 10% from a year earlier and beating analyst expectations of $89.54 billion, according to LSEG data. Its earnings per share of $1.57 topped expectations for $1.43 per share. Apple shares were up 3% in after-hours trading, extending gains after Apple provided its forecast. Sales of iPhones, the best-selling product for the company based in Cupertino, California, were up 13.5% to $44.58 billion, beating analyst expectations of $40.22 billion. Apple has been shifting production of products bound for the U.S., sourcing iPhones from India and other products such as Macs and Apple Watches from Vietnam. The ultimate tariff rates many Apple products could face remain in flux, and many of its products are currently exempt. Sales in its Americas segment, which includes the U.S. and could face tariff impacts, rose 9.3% to $41.2 billion. In Greater China, where Apple has faced long delays in approval to introduce AI features on its devices, sales were $15.37 billion, up from a year ago and above expectations of $15.12 billion, according to a survey of five analysts from data firm Visible Alpha. That gain was a turnaround from a year-over-year decline in China sales in the March quarter. In a conference call with analysts, Cook said some of that was due to a subsidy program in China to help revive the smartphone market, which boosted some of Apple's products. "It was the first full quarter of the subsidy playing out," Cook told analysts. EARLY PURCHASES In an interview with Reuters, Cook said the company set seasonal records for upgrades of iPhones, Macs and Apple Watches. He said Apple estimates about 1 percentage point of its 9.6% of sales growth in the quarter was attributable to customers making purchases ahead of potential tariffs. "We saw evidence in the early part of the quarter, specifically, of some pull-ahead related to the tariff announcements," Cook told Reuters, though he also said the active user base for iPhones hit a record high in all geographies. The U.S. is still negotiating with both China and India, with Trump saying India could face 25% tariffs as early as Friday. However, analysts said India could still retain cost advantages for Apple in the longer term. "The pull-forward in demand due to tariffs was somewhat expected given the uncertainty around pricing. However, it's important to put this in context as this is typically a slow quarter for Apple, yet they still delivered exceptional results with iPhone growth," Emarketer analyst Jacob Bourne said. Tariffs are only one of Apple's challenges. The company faces competition from rivals such as Samsung Electronics Co in a tough market for premium-priced mobile phones. On the software front, Apple faces challenges from Alphabet, which is quickly weaving AI features into its competing Android operating system. While AI leaders Microsoft and Nvidia have seen their stock market values soar to record highs, Apple's shares have fallen 17% in 2025, with investors concerned about the impact of tariffs, and about what they view as slow progress integrating AI features into its products. Apple has delayed the release of an AI-enriched version of Siri, its virtual assistant, but Cook said the company is "making good progress on a personalized Siri." He also said Apple, which has thus far not engaged in the massive capital expenditures of its Big Tech rivals to pursue AI, is "significantly growing" its investments in artificial intelligence. "Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone, and that's at the heart of our AI strategy," Cook said. Apple faces regulatory rulings in Europe that threaten to undermine its lucrative App Store business. Apple said sales from its services business, which includes the App Store as well as music and cloud storage, were $27.42 billion, topping analyst expectations of $26.8 billion. Sales of wearables such as AirPods and Apple Watches were $7.4 billion, missing estimates of $7.82 billion. Mac sales of $8.05 billion beat expectations of $7.26 billion, while iPads hit $6.58 billion in sales, missing expectations of $7.24 billion. Apple said gross margins were 46.5% in the fiscal third quarter, beating analyst expectations of 45.9%, according to LSEG estimates. The company forecast gross margins for the current quarter of 46% to 47%, with the entire range above estimates of 45.9%, according to LSEG data.
