Apple just posted a blockbuster quarter with $143.8 billion in revenue, but CEO Tim Cook stumbled when Morgan Stanley analyst Erik Woodring asked the question everyone's been avoiding: how exactly does Apple plan to make money from its massive AI investments? Cook's answer - a word salad about 'great value' and 'opportunities' - reveals what might be tech's most uncomfortable truth. While the industry pours billions into AI development, the path to profitability remains as clear as mud.
Apple CEO Tim Cook was riding high during Thursday's earnings call. The company had just crushed expectations with $143.8 billion in quarterly revenue, marking a 16% jump from the previous year according to Apple's official report. Analysts lobbed softball questions. Cook batted them away with practiced ease.
Then Morgan Stanley's Erik Woodring stepped up to the plate with a fastball nobody saw coming.
'When I think about your AI initiatives, you know, it's clear there are added costs associated with that,' Woodring started, his voice carrying what might have been a tremor of nervousness. 'Many of your competitors have already integrated AI into their devices, and it's just not clear yet what incremental monetization they're seeing because of AI.'
The pause that followed must have felt eternal. Then came the question that's been lurking in the darkest corners of every investor's mind: 'So, how do you monetize AI?'
It's a fair question. Apple's been pouring resources into what it calls Apple Intelligence, rolling out AI features across iOS and integrating large language models into Siri and system-wide functions. The compute costs alone are staggering - running inference on device and in the cloud burns through both silicon and cash. But unlike subscription services or hardware sales, the revenue line item for AI remains conspicuously absent.
