It may be a cliche to invoke the pick-and-shovel sellers of the California Gold Rush, but what better way is there to frame what’s happening to Apple Inc.?
Its lack of a defined generative AI strategy, and the sputtering rollout of “Apple Intelligence” on the iPhone, has been a source of grave concern ever since the emergence of ChatGPT. In that time, Chief Executive Officer Tim Cook has resisted calls to make a huge acquisition to catch up with its competitors or increase spending to hasten progress on the company’s in-house efforts. This earnings season has validated that composure.
On Wednesday, four of Apple’s competitors in the AI stakes reported their earnings, offering a decidedly mixed bag to investors whose concerns on return of investment grow ever louder. The collective capital expenditures of Amazon.com Inc., Meta Platforms Inc., Alphabet Inc. and Microsoft Corp. are now forecast to surpass $700 billion for the year.
Separate from the pack is Apple, which has a much different story. Analysts on its Thursday earnings call didn’t bring up capex even once — a contrast to previous quarters when the concern had been that Cook was being too timid in spending compared with Apple’s peers. Instead, focus was on simply whether the company can make its hardware quickly and cost effectively enough to meet what is a surge in demand to use them … for AI.
“The Mac mini and the Mac Studio may take several months to reach supply-demand balance,” said Cook, referring to the desktop machines that have been given a new lease on life as the devices of choice for those experimenting with and developing AI agents like OpenClaw. Sales of the computers have been particularly strong in China, he said. The country has experienced wildly enthusiastic adoption of the technology.
Apple said the $599 MacBook Neo, the company’s new brightly colored laptop range, exceeded expectations. Only a few weeks of sales took place in the quarter, so a fuller picture will come later. As Apple’s first low-cost laptop, the device stands to be the gateway to AI tools for a new generation of computer users as the company seeks to disrupt Google’s Chromebook domination of the education market. Cook said the product’s reception had caught them off guard, with foot traffic to its stores for it at record levels. “We were very bullish on the product before announcing it,” Cook said, “but we undercalled the level of enthusiasm.”
