{"id":9883,"date":"2026-11-03T15:56:22","date_gmt":"2026-11-03T15:56:22","guid":{"rendered":"https:\/\/silvybrand.com\/?p=9883"},"modified":"2026-11-03T15:56:22","modified_gmt":"2026-11-03T15:56:22","slug":"apple-earnings-q4-ai","status":"publish","type":"post","link":"https:\/\/silvybrand.com\/?p=9883","title":{"rendered":"Apple is all in on AI \u2014 its own and everyone else\u2019s"},"content":{"rendered":"


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Apple\u2019s latest earnings<\/a> show how it\u2019s continuing to capitalize on the AI boom without busting its budget on the infrastructure spending consuming its competitors.<\/p>\n<\/div>\n

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Overall, Apple posted its best-ever fiscal year for revenue and earnings per share. iPhone and Mac sales continued to grow strongly in the fourth quarter. iPhone revenue rose 17.5% from a year earlier to a September quarter record of $57.6 billion while Mac revenue climbed 24% to $10.8 billion, its highest level in four years. Shares nevertheless fell in premarket trading Tuesday after Apple warned<\/a> that rising memory costs would squeeze its profit margins in the holiday quarter.<\/p>\n<\/div>\n

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Apple hasn\u2019t disclosed how much of its revenue growth reflects AI demand or higher prices<\/a>, but its executives clearly see the technology as a way to drive further sales.<\/p>\n<\/div>\n

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During the earnings call, CFO Kevan Parekh cited a \u201cwide range of ways that AI can contribute to revenue growth over time.\u201d<\/p>\n<\/div>\n

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\u201cOn the product side, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities,\u201d he said. \u201cAnd we also feel there\u2019s opportunities across third-party apps and partnerships as well as first-party opportunities.\u201d<\/p>\n<\/div>\n

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Apple can sell its giant user base the devices they use for AI, even if the AI itself comes from someone else. It can collect fees on subscriptions to AI apps. And it can charge customers who want more access to its own AI features.<\/p>\n<\/div>\n

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\u201cWe see tremendous opportunity in AI,\u201d John Ternus said on his first earnings call as CEO.<\/p>\n<\/div>\n

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AI and Apple Intelligence were mentioned a record 45 times on the earnings call, according to financial research platform AlphaSense \u2014 even more than on the call following Apple\u2019s unveiling of the technology and plans for a revamped Siri in June 2024.<\/p>\n<\/div>\n

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Mentions of AI or \u201cApple Intelligence\u201d on earnings calls<\/h2>\n<\/p>\n<\/div>\n
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On the call, Apple continued to position itself as the interface<\/a> through which consumers use AI \u2014 including competitors\u2019 technology. With more than 2.5 billion active devices, it already has an enormous audience for whatever AI services emerge.<\/p>\n<\/div>\n

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Apple, unlike its Big Tech peers, isn\u2019t pouring comparable sums into infrastructure. Its approach combines on-device processing, its own servers, and outside AI technology. Siri AI uses models developed with Google\u2019s Gemini technology<\/a> while Apple reportedly plans to let users choose among outside AI providers<\/a> for features such as writing tools and image generation.<\/p>\n<\/div>\n

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Apple spent $2.2 billion on capital expenditures last quarter, compared with Amazon\u2019s $77.3 billion and Alphabet\u2019s $51.4 billion. Those totals cover companywide CapEx, not just AI, and exclude some AI expenses. Apple\u2019s operating expenses rose 21% to $19.2 billion as it increased R&D spending, including on AI. Siri AI\u2019s cloud costs will appear in services cost of sales. Those costs could grow with usage: Parekh said it\u2019s too early to predict how many requests will require servers rather than on-device processing. Still, Apple\u2019s capital spending remains just a fraction of its peers\u2019.<\/p>\n<\/div>\n

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More AI usage also gives Apple something to sell.<\/p>\n<\/div>\n

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Siri AI is only beginning to reach customers. Apple launched the revamped assistant in beta for US English users in September and expanded it to French, Japanese, Korean, Portuguese, and Spanish in October.<\/p>\n<\/div>\n

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Apple plans to turn some of that usage into subscription revenue. Ternus said features relying on server-side models, including Siri AI and intelligent photo editing, will have usage limits. Customers who need more capacity \u201cwill be able to purchase expanded access in the future,\u201d he said. \u201cIn the beginning, iCloud tiers were largely about storage, but we\u2019ve been adding more capabilities and features to it.\u201d<\/p>\n<\/div>\n

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Apple also benefits when customers buy its hardware to run AI locally, including models developed by other companies. Mac, Ternus said, is \u201chaving an AI moment all its own.\u201d<\/p>\n<\/div>\n

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\u201cWe feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities.\u201d<\/p>\n<\/div>\n<\/div>\n

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Apple offered specific examples of companies putting its computers to work on AI. Gap is running AI entirely on Mac Mini computers for loss prevention across hundreds of stores, avoiding cloud token costs for those tasks. Christie\u2019s is running local models on Mac Studio computers to improve workflows including pricing estimates.<\/p>\n<\/div>\n

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For those customers, buying Apple hardware provides a way to use AI without paying a cloud provider for every request.<\/p>\n<\/div>\n

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Mac Mini and Mac Studio, Ternus said, \u201care pushing the boundaries of local, private AI, giving users the ability to do things once considered impossible.\u201d<\/p>\n<\/div>\n

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The Mac Mini\u2019s emergence as an AI machine<\/a> has given the small, screenless desktop a new constituency among developers and hobbyists looking for a relatively affordable way to run models locally. Earlier this year, then-CEO Tim Cook said customer recognition of the Mac Mini and Mac Studio\u2019s capabilities for AI and agentic tools was happening faster than Apple had predicted, leading to higher-than-expected demand.<\/p>\n<\/div>\n

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Apple also makes money when customers subscribe to someone else\u2019s AI. Earlier this year, The Wall Street Journal<\/em> reported<\/a> that Apple was on pace to bring in more than $1 billion in App Store fees from generative AI apps in 2026, according to analytics firm AppMagic.<\/p>\n<\/div>\n

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That revenue, of course, depends on customers paying through Apple\u2019s system. OpenAI has begun directing potential subscribers to pay through its website instead of the App Store, bypassing Apple\u2019s commissions, The Wall Street Journal<\/em> reported<\/a>. Apple\u2019s position gives it a way to profit from competitors\u2019 AI, but those competitors have an incentive to find a route around its fees.<\/p>\n<\/div>\n

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Still, Apple already has multiple ways to benefit from people using AI. It can sell the computer, collect a subscription commission, and eventually charge for more of its own services. It doesn\u2019t have to build every model \u2014 or fund infrastructure on its competitors\u2019 scale \u2014 to get paid.<\/p>\n<\/div>\n

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