Apple Continues Being Mysterious About AI While Services Reach A New Revenue Record And The iPhone Continues Its Fall From Glory

On Thursday, Apple Inc (NASDAQ: AAPL) issued its fiscal second quarter results and although they were slightly higher than Wall Street expected, Apple posted a revenue drop, including falling iPhone sales. But Apple’s biggest news were that the board authorized its largest ever share buyback. The board authorized $110 billion in share repurchases, which represents a 22% YoY increase compared to last year’s authorization.

Fiscal Second Quarter Highlights

Revenue dropped 4% YoY to $90.75 billion, surpassing LSEG’s estimate of $90.01 billion. Net income contracted 2% YoY to $23.64 billion, or $1.53 per share, while gross margin of 46.6% was in line with LSEG’s estimate.

Apple’s revenue empire is undergoing a major restructuring.

iPhone sales tanked 10% YoY to $45.96 billion, while LSEG estimated $46 billion but CEO Tim Cook emphasized that these sales suffered from a difficult comparison as during last year’s comparable quarter, Apple realized $5 billion in delayed iPhone 14 sales from Covid-based supply issues.

Mac brought in sales of $7.5 billion as revenue rose 4% YoY due to new MacBook Air models released with an upgraded M3 chip in March, exceeding LSEG’s estimate of $6.86 billion. iPad revenue tanked 17% YoY as it amounted to $5.6 billion, coming short of LSEG’s $5.91 billion. Other products brought in $7.9 billion, also falling short of LSEG’s estimate of $8.08 billion.

A rare bright spot, services brought $23.9 billion to the revenue table, exceeding LSEG’s estimate of $23.27 billion as the segment continued to grow at a pace of 14.2% YoY.

An Unknown Outlook

Although it did not provide an official guidance, Apple CEO Tim Cook spoke of sales growth in the “low single digits” for the June quarter, while CFO Luca Maestri mentioned a double-digit YoY percentage growth in iPad saleswith services continuing to grow at about the latest reported rate. Apple is also due to announce new iPads in May that are expected to revive demand.

What about AI?

It’s safe to say that there’s no tech company that hasn’t been heavily investing in generative AI over the past two years. Meta Platforms (NASDAQ: META) decided to spend even more money on its development. With its latest earnings report, Meta CEO Mark Zuckerberg confirmed that it will take years for Meta to start making money from AI. Fortunately, Meta has a good track record when it comes to monetizing its assets.

Story continues

But, Apple is still being mysterious about its plans as generative AI didn’t make a big part of the earnings conversation. Once again, Cook only provided a teaser, perhaps somewhat bolder, saying that Apple has big generative AI plans that will differentiate it from its competitors. Hopefully, more about Apple’s AI roadmap will be revealed during its developer event in June.

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This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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