Something to look forward to: Apple just dropped a few major hints about its AI ambitions, suggesting some tantalizing developments are brewing in Cupertino. CEO Tim Cook was feeling pretty bullish about Apple's AI prospects on the company's Q2 2024 earnings call, proclaiming that the company has "advantages that will differentiate us in this new era."
So far, the generative AI landscape has been dominated by the likes of OpenAI, Google, and Microsoft. But Cook name-dropped Apple's unified hardware/software integration, powerful chips with advanced neural engines for on-device AI processing, and the company's privacy-first approach as differentiators.
"We continue to feel very bullish about our opportunity in generative AI. We are making significant investments and we're looking forward to sharing some very exciting things with our customers soon," said the CEO at the earnings call.
Rumors suggest Apple's initial AI features will run locally on-device rather than contacting the cloud, giving them a privacy advantage over cloud-based options. But pulling that off will require serious silicon muscle, which is where Apple's upcoming M4 chip likely comes into play.
Mark Gurman at Bloomberg says there's a chance we'll see the M4 debut as early as next week in new iPad Pro models. That launch would line up with Cook's tease of "an exciting product announcement next week" on the earnings call.
The CEO also revealed Apple will have "an incredible Worldwide Developers Conference next month," so we may get more details on the AI front at WWDC in June.
Overall, Apple had a decent Q2 2024 despite the economic headwinds with revenue hitting $90.8 billion. And while iPhone sales slipped, services shattered records at $23.9 billion in revenue. Apple's increasingly recurring revenue from subscriptions, apps, and cloud services is proving to be a rock in turbulent times.
Net profit of $23.6 billion translated to $1.53 per diluted share. Apple also juiced its dividend by a penny to $0.25 per share and authorized $110 billion for share buybacks to keep rewarding investors.
In other news this week, Apple made some adjustments to the new 30% Core Technology Fee it recently introduced for developers in the EU. Free, non-monetized apps will be fully exempt from the controversial fee going forward. Apple is also giving smaller developers with under €10 million in annual revenue a three-year grace period before they have to start paying.
It's a prudent move to try and quell some of the criticism around the fee, which has been labeled as the "Apple tax" by detractors. Whether it will be enough to get regulators and developers off the company's back remains to be seen.