Apple mentioned AI or "Apple Intelligence" a record 45 times on its latest earnings call, according to financial research platform AlphaSense, surpassing even the call following the company's June 2024 unveiling of the technology. The tech giant reported its strongest-ever fiscal year for revenue and earnings per share, according to an earnings report published by The Verge, while maintaining capital spending dramatically below competitors also racing to capitalize on artificial intelligence.
iPhone revenue jumped 17.5% year-over-year to a September quarter record of $57.6 billion, while Mac revenue climbed 24% to $10.8 billion, its highest level in four years, according to the report. Apple spent $2.2 billion on capital expenditures last quarter, compared with Amazon's $77.3 billion and Alphabet's $51.4 billion, though those totals cover companywide spending beyond AI. Operating expenses rose 21% to $19.2 billion as the company increased R&D spending, including on AI. Shares fell in premarket trading Tuesday after Apple warned that rising memory costs would squeeze profit margins in the holiday quarter. The company now has more than 2.5 billion active devices.
"On the product side, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities," CFO Kevan Parekh said during the earnings call. The report notes that Apple's strategy combines on-device processing, its own servers, and outside AI technology, with Siri AI using models developed with Google's Gemini technology while the company reportedly plans to let users choose among outside AI providers for features such as writing tools and image generation. New CEO John Ternus said features relying on server-side models, including Siri AI and intelligent photo editing, will have usage limits, and customers who need more capacity "will be able to purchase expanded access in the future."
Apple's approach lets it profit from AI without matching competitors' infrastructure investments, the report explains. The company can sell hardware to its massive user base for running AI locally, collect fees on subscriptions to third-party AI apps through the App Store, and eventually charge customers who want expanded access to its own AI features. Gap is running AI entirely on Mac Mini computers for loss prevention across hundreds of stores, avoiding cloud token costs, while Christie's is running local models on Mac Studio computers to improve workflows including pricing estimates. The Wall Street Journal reported that Apple was on pace to bring in more than $1 billion in App Store fees from generative AI apps in 2026, according to analytics firm AppMagic, though OpenAI has begun directing potential subscribers to pay through its website instead of the App Store to bypass Apple's commissions.
Apple launched the revamped Siri assistant in beta for US English users in September and expanded it to French, Japanese, Korean, Portuguese, and Spanish in October. Ternus described the Mac as "having an AI moment all its own," noting that customer recognition of the Mac Mini and Mac Studio's capabilities for AI and agentic tools was happening faster than Apple had predicted, leading to higher-than-expected demand. Parekh said it's too early to predict how many AI requests will require servers rather than on-device processing, meaning Siri AI's cloud costs, which will appear in services cost of sales, could grow with usage. The company's positioning as the interface through which consumers access AI, including competitors' technology, gives it multiple revenue streams without requiring it to build every model or fund infrastructure on its competitors' scale. For enterprises and consumers alike, the choice between paying per cloud request or buying Apple hardware for local processing may reshape how businesses budget for artificial intelligence deployment.