21st Century Business Herald Nov 6 (Editor Ni Zhanlin) Apple has recently warned investors that as the company enters unverified new markets like artificial intelligence (AI) and virtual reality (VR) devices, future products may not be as profitable as its iPhone business.

In a 10-K form recently submitted to the U.S. Securities and Exchange Commission (SEC), Apple issued a new warning on growth and profit margins. 'New products, services, and technologies may replace existing operations and could result in lower revenue and profit margins or have a significant adverse impact on the company's business, operations, and financial condition.'

In fact, Apple has often warned investors in its annual reports that competition, forex, supply chain issues, and other factors may bring 'fluctuations and downward pressure' to its profit margins, but the results tend to be better than expected. Investors are also expecting this to be another 'boy who cried wolf' story.

It is worth noting that in previous years' 10-K forms, Apple would mention that the launch of new products might have 'higher cost structures,' but did not discuss the financial condition of its future products in such a direct manner.

In the newly submitted documents, Apple also warns of the potential impact of 'geopolitical tensions,’ a term that has not appeared in Apple's risk factors for many years. Additionally, Apple notes that the security issues of artificial intelligence are also significant risks that cannot be ignored.

At the time of these disclosures, Apple is heavily investing in artificial intelligence, trying to catch up with competitors like Google. Apple released the first round of 'Apple Intelligence' functionality just last week, approximately six weeks after the debut of the iPhone 16. Meanwhile, Apple's core AI functionality is expected to be released on the iPhone early next year, with more features expected in the coming months, including integrating ChatGPT into Siri.

In addition to iPhone and artificial intelligence, Apple's foray into the virtual reality field with the Vision Pro product has recently encountered bad news, as some media reports indicate that the product will be discontinued by the end of the year. While this may not have much impact on the overall company performance, it is clearly not a successful attempt for Apple.

In addition, the stock god Buffett's Berkshire Hathaway further reduced its stake in Apple Inc. in the third quarter. Berkshire's quarterly report released last Saturday showed that as of the end of September, the company held $69.9 billion in Apple's stocks, meaning Berkshire reduced its holdings by about 25% in the third quarter.

According to data collected by Visible Alpha, most Wall Street analysts expect Apple's gross margin to rise to 49% in the coming years. However, some analysts also point out that the profit margins of Apple's new products may not necessarily be comparable to the iPhone and its related services.

Deepwater analyst Gene Munster stated: "Apple is entering new product categories, facing a moment with many unknown factors."

Munster also raised a question, besides using new features to drive device sales, how will Apple's service business make money from generative artificial intelligence? "Artificial intelligence is transformative, and Apple's attempts in this area will not be the last."