Apple beat analysts’ sales and profit expectations on Monday after reporting record revenue for the July to September quarter, IOL reported.
The company said iPhone sales and services revenue drove the result. It also warned that higher costs linked to artificial intelligence will pull down its margins over the holiday season.
“We’re closing the year with our most ambitious lineup yet,” said CEO John Ternus in a statement before a call with analysts.
Ternus took over from Tim Cook in September. He hinted that he expects strong holiday sales of the newest products, including the foldable Duo.
Chief financial officer Kevan Parekh said the gross margin will slip in the last part of the year. It stood at 47.9 percent in the September quarter.
“We expect gross margin to be between 45 percent and 46 percent. This includes primarily the impact of higher memory costs, as well as some costs related to the ramp of Siri AI,” Parekh said.
In June, Apple rebuilt Siri, its digital assistant, through a partnership with Google. The new Siri uses Google’s Gemini model.
Parekh tried to calm investors who are worried about rising AI spending. “We feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities,” he said.
He added that Apple also sees chances in third-party apps, partnerships and its own products.
In September, Apple launched three new phones. These were the 18 Pro, the 18 Pro Max and the Duo, its first folding phone. It also released two new desktop computers.
In October, the company showed HomeView, a smart display that runs on Siri AI. It also revealed its first MacBook Pro with a touchscreen.
In July, Apple started Apple Upgrade. This leasing plan lets customers in the United States pay for an iPhone or other devices in monthly instalments.
Apple has long been criticised for falling behind in the AI race. However, it keeps its own spending low while its rivals pour money into data centres.
Analysts expected Apple to spend $11 billion in the 12 months to September, when its financial year ends.
According to analyst estimates, Microsoft, Alphabet, Amazon and Meta are on track to spend more than $700 billion on capital investment this year. Much of that money goes to AI systems.
Meta said in July it expected to spend $145 billion this year. Amazon said it expects to spend $220 billion, and Microsoft said it expects to spend $170 billion.
Alphabet’s latest forecast puts its 2026 spending at between $195 billion and $205 billion.
Apple is also in a court fight with one of its AI partners. In July, it sued OpenAI, claiming the AI lab ran a campaign to steal Apple’s trade secrets.
Apple said OpenAI did this while trying to build its own consumer hardware device. OpenAI’s ChatGPT has been part of Apple products since 2024.
Source: this article is based on reporting by IOL Technology. Image: IOL Technology. Written with the help of AI and published by the Tzaneen Voice Technology desk. See our Editorial Standards.
Werner Jacobs covers technology for Tzaneen Voice. Werner reports on mobile networks, data prices, internet access, smartphones, apps, AI, cybersecurity and South African tech companies. Each story explains what a new product, price change or policy means for ordinary users in South Africa.