Tim Cook: Apple to Reveal Artificial Intelligence Plans Soon
Tim Cook, CEO of Apple (center) on a visit to several countries in Asia last week. (photo: x @tim_cook)
– In recent years, Apple Chief Executive Tim Cook has answered questions from Wall Street analysts about his plans for artificial intelligence and complaints that the iPhone maker does not have compelling AI plans.
After the company reported quarterly earnings on Thursday, May 2, Cook insisted that Apple would soon have concrete details about its plans for AI to talk about. "We continue to be very optimistic about our opportunities in generative AI and we are making significant investments," said Cook as quoted by VOI from Reuters. He noted that Apple has spent 100 billion US dollars (Rp. 1,597 trillion) in the last five years on research and development.
Apple's major rivals in the Technology industry have also spent comparable or even greater amounts on R&D over the same period. But they have also spent a lot of effort building data centers to host AI services.
Microsoft spent 14 billion US dollars (Rp. 223.5 trillion) in the last quarter on capex, while Alphabet's Google was not far behind, at 12 billion US dollars (Rp. 191.6 trillion). Meta Platforms told investors last week to expect as much as 40 billion US dollars (Rp. 638.7 trillion) in capital spending this year. Apple thinks differently. The spending for all of 2023 is just over 10 billion US dollars (Rp. 159 trillion).
Apple, which makes most of its money from selling consumer devices, has paid the price for that stance for much of this year, with its shares down 10% as investors worried the company was falling behind in the AI race.
On Friday, May 3, Apple shares rose 6.4%, recovering some of their recent losses.
Shares of Meta, Google and Microsoft - all of which make money from selling software or advertising services - have all soared to record highs as the companies fight to dominate the emerging AI landscape, although investors have also been surprised by pricesdata centers and specialized processors required to train AI models.
Apple signaled Thursday that the company would not take the same approach. While it's expected Apple will reveal new AI features at its annual software conference next month and update its product line with AI-ready chips, Chief Financial Officer Luca Maestri told investors Apple shouldn't expect major changes in howThe company handles capital expenditure.
Responding to an analyst's question, Maestri noted the company's long-standing practice of sharing manufacturing equipment costs with its suppliers, which has kept Apple's costs low and its cash generation for more than a decade.
"We do the same thing on the data center side," Maestri said. "We have our own data center capacity, and then we use capacity from third parties. This is a model that has worked for us historically, and we plan to continue in the same way going forward."
That may be fine for Apple, as it remains unclear whether AI features like chatbots running directly on devices will encourage users to buy new phones, tablets or laptops, which remain Apple's biggest source of revenue and profits. Creative Strategies' Ben Bajarin said that while better processors may serve as a "borderline" for some users who need AI tools for professional use, those features may not trigger a sales spike. "It will be something that helps increase sales, but I don't expect it to be a super cycle," Bajarin said. “You have to be careful to temper expectations.”
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