Cook said that some features of Apple Intelligence will be launched gradually within this year, and it is expected that Siri will integrate ChatGPT function before the end of this year. At the same time, Apple is increasing its investment in AI and machine learning and plans to increase the investment year by year.
Apple achieved its best June quarterly performance ever. In the earnings conference call after the financial report, Cook said he was very excited about "Apple Intelligence" and would increase AI investment year by year.
Apple handed in a dazzling financial report overnight, with both revenue and profit exceeding expectations for the sixth consecutive quarter, setting the highest total revenue and EPS record for the June quarter. Apple CEO Cook and CFO Luca Maestri provide interpretation on company performance, service business growth, and artificial intelligence plans at the earnings conference call.
Apple performed particularly well in the service business and iPad sales, and is also actively deploying in the AI field. However, the growth of iPhone and Mac businesses has slowed down, and coupled with increased regulatory pressure, Apple will still face challenges in the next few quarters.
Looking ahead to the third quarter, Apple expects revenue to achieve year-on-year growth, with growth similar to the second quarter, and service business revenue is expected to maintain double-digit growth. The gross margin is expected to be between 45.5% and 46.6%. The following are the highlights of the financial report conference:
Increase AI investment, and Apple Intelligence will be launched one after another this year.
Cook holds an optimistic attitude towards Apple's efforts in the field of artificial intelligence.
Cook said he is "very excited" about Apple Intelligence, which is the upcoming AI platform that provides text summaries, image generation, and other functions for iPhone users.
Cook revealed:
Apple Intelligence will be launched in stages, and some functions will be launched one after another this year. Other language versions besides American English will not be available at the initial release. Siri is expected to integrate ChatGPT function before the end of this year.
Cook also stated that Apple is increasing its investment in artificial intelligence and machine learning, and plans to increase investment year by year to prepare for the launch of Apple Intelligence this fall.
Cook said that Apple has been investing more and reallocating more resources to develop Apple Intelligence. This quarter's performance reflects a year-on-year increase in AI spending:
What we did was to transfer many people who were originally engaged in other jobs to the AI department. From the perspective of data centers, we use a mixed method. So we have our own data center and partners. The capital expenditures will be borne by partners, and we will pay the fees.
The performance of the iPhone 15 series is better than that of the iPhone 14, and iPad sales have increased significantly.
Cook said that the performance of the iPhone 15 series is better than that of the iPhone 14 series. In the quarter ending in June, the iPhone's installed base reached a historic high.
Regarding the upcoming iPhone 16, Cook said:
The company is "very excited" about Apple Intelligence and the value it brings to users, believing that this will be another powerful reason for users to upgrade.
Although Apple Intelligence functions will be updated for free with iOS 18 and macOS 15, they require the latest Apple devices-such as M1 or higher versions of Pad and Mac or iPhone 15 Pro. The new iPhone 16 model, which will be released this fall, will also be compatible with Apple Intelligence, which may motivate more people to buy new phones.
Specifically, iPhone revenue fell slightly by 1% to 39.3 billion US dollars, Mac revenue grew by 2% to 7 billion US dollars, and home, accessories, and wearable device revenue fell by 2% to 8.1 billion US dollars. Thanks to the launch of iPad Pro (M4) and iPad Air (M2), iPad sales have increased significantly, and iPad revenue reached 7.2 billion US dollars, a year-on-year increase of 24%.
Another record high for service business revenue.
Service business revenue reached $24.2 billion, a historic high, and a year-on-year increase of 14.2%. The number of paid subscribers exceeded 1 billion, setting a new record, and advertising, cloud services, and payment services all set new records.
Luca Maestri, CFO of Apple, said:
Seeing customers' continued engagement with its ecosystem, Apple is doing "very well" in improving service quality and increasing the amount of content available, and plans to continue adding new Apple TV+ and Apple Arcade content.
Facing regulatory challenges.
Maestri said that Apple is continuing to discuss its compliance with the Digital Markets Act with the European Commission. Apple has seen a "very high level of acceptance" from developers for these changes, and overall, the performance of its service business and App Store has been "quite good".
Maestri reiterated that the App Store accounts for 7% of Apple's total revenue in the European Union.
Cook said:
Apple is working to understand the regulatory requirements it faced prior to launching Apple Intelligence in the European Union. When iOS 18, iPadOS 18, and macOS Sequoia are released, Apple Intelligence features will not be available in the European Union.