Apple CEO Tim Cook Provides Update on AI Opportunities and More

After Apple (AAPL) reported fiscal third-quarter results that surpassed analysts’ expectations, CEO Tim Cook gave investors an update on the iPhone maker’s artificial intelligence (AI) opportunities, outlook, and more in the company’s earnings call Thursday.

New AI Features To Be Rolled Out in Stages

Amid speculation about when new AI features will be released after Apple unveiled Apple Intelligence in June, Cook suggested the new features will become available to users over time rather than all at once.

The CEO said the company plans to roll out Apple Intelligence to U.S. English users in the fall, and then “proceed with more functionality, more features, and more languages and regions” in the next year.

Cook also said Apple plans to integrate ChatGPT features into iPhones by the end of the 2024 calendar year through its partnership with OpenAI.

Apple provided developers a first look at Apple Intelligence ahead of reporting earnings through the beta version of iOS 18.1.

Record Base Could Add Fuel to AI-Driven Upgrade Cycle

Cook said that while it may be difficult to project upgrade rates now, the company is “very excited” about the “level of value” Apple Intelligence is expected to bring users.

Apple Intelligence will run on iPhone 15 and newer devices, which could drive consumers to upgrade for the AI features.

Cook also reported Apple’s installed user base reached a record high, in what could add fuel to the scale of a potential AI-driven upgrade cycle.

Apple is expected to announce the iPhone 16 with iOS 18 in September, with AI capabilities to follow.

Double-Digit Growth in Services Revenue

After Apple reported record-high revenue from its services segment in the third quarter, the company said it expects double-digit growth to another record high in the fourth quarter.

Apple reported its services revenue climbed to $24.21 billion in the third quarter, up 14% from the year-ago period. By contrast, product sales grew about 1.6% as iPad and Mac sales rose, while iPhone sales declined close to 1%.

The company reported total revenue of $85.78 billion for the quarter, representing 5% year-over-year growth.

Improvements in China Amid Pricing Discounts

Despite reporting a year-over-year drop in China sales, Cook said there were signs of improvement in the region compared to the first half of fiscal 2024, suggesting recent pricing discount efforts could be paying off.

The company reported a 6.5% year-over-year decline in sales in the China region, though Cook said around 3% was currency-related.

Cook said iPhone 15 sales since the device’s launch were outperforming what the company recorded for the iPhone 14 in the greater China region, offering what could be a positive indicator ahead of the upcoming iPhone 16.

Apple shares were little changed in extended trading Thursday following the company’s earnings call. They’ve gained over 13% since the start of the year through Thursday’s close.

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Apple CEO Tim Cook provided investors with an update on the company’s artificial intelligence (AI) opportunities during its recent earnings call. Cook revealed that new AI features will be rolled out gradually, starting with U.S. English users in the fall. The company plans to add more functionality, features, languages, and regions over the next year. Additionally, Apple intends to integrate ChatGPT features into iPhones by the end of 2024 through its partnership with OpenAI. Developers were given a sneak peek of Apple Intelligence through the beta version of iOS 18.1.

Cook expressed excitement about the potential value that Apple Intelligence will bring to users. The AI features will be available on iPhone 15 and newer devices, which could drive consumers to upgrade their devices. Apple’s installed user base has reached a record high, further fueling the potential for an AI-driven upgrade cycle. The company is expected to announce the iPhone 16 with iOS 18 in September, with AI capabilities to follow.

In the third quarter, Apple reported record-high revenue from its services segment. The company expects double-digit growth in services revenue to continue in the fourth quarter. Services revenue reached $24.21 billion, a 14% increase compared to the same period last year. Product sales, on the other hand, grew by only 1.6%, with iPad and Mac sales rising and iPhone sales declining slightly. Overall, Apple reported total revenue of $85.78 billion for the quarter, representing 5% year-over-year growth.

Despite a year-over-year drop in sales in China, Cook noted signs of improvement compared to the first half of fiscal 2024. Recent pricing discount efforts may be paying off, as iPhone 15 sales in China are outperforming the sales of the previous model. This positive indicator bodes well for the upcoming iPhone 16.

Following the earnings call, Apple shares remained relatively unchanged in extended trading. However, the stock has gained over 13% since the beginning of the year.

Overall, Apple’s AI initiatives and strong performance in services revenue indicate the company’s commitment to innovation and growth. As Apple continues to expand its AI capabilities and improve its offerings, users can expect enhanced features and experiences on their devices.