Apple CEO Declares New Chapter in AI Play, Stock Dips 1.8%

On Thursday, Tim Cook, the CEO of Apple, announced what he termed a new chapter for the company, following the recent introduction of a range of generative AI tools integrated into its major products.

Cook expressed his enthusiasm by saying, "This is just the beginning of what we believe generative AI can do, and I couldn’t be more excited for what's to come.” However, the market reaction showed that investors were not as optimistic.

By the end of the trading day, Apple stock had decreased by 1.8%, closing at $225.91. After-hours trading saw a further drop of 1.8%, bringing the stock's price down to $221.90, as reported by Google Finance. This drop occurred as the financial results indicated only modest growth in sales for the year.

For the quarter, Apple announced sales of $94.9 billion, which represents a 6% increase compared to the previous year. This figure included $46.2 billion in sales from iPhones. However, the company’s profits plummeted by 35.9% from the same period last year to $14.7 billion. This decline was largely attributed to a $14 billion impact from back taxes determined by a court ruling in Ireland earlier in September.

The recently released iOS 18.1 update features Apple Intelligence, a tool that allows users to summarize and rewrite text, search their photo libraries using image descriptions, and transcribe phone calls in real-time, among various other functionalities. Feedback on these features has been mixed. Wired described the experience as "flat," while the New York Times noted that the AI-enhanced future remains a distant reality. Axios characterized the update as offering only "modest improvements."

During the announcement, Cook mentioned that more features are expected to launch in December, such as integration with ChatGPT and a new Visual Intelligence feature, which will enable users to gather information using their camera app. Additionally, capabilities for non-US English and multiple foreign languages are set to be introduced in the following months.

Though Cook did not directly address whether the new Apple Intelligence had positively affected iPhone sales since its rollout, he did mention that adoption of iOS 18.1 was occurring at twice the speed compared to iOS 17.1 during the same period last year. "We’re getting a lot of positive feedback from developers and customers,” he stated.

Meanwhile, other technology giants like Microsoft and Google have also revealed initiatives to integrate AI models into their offerings this year, further increasing competition in the market. Both companies recently reported earnings that surpassed expectations. Additionally, Amazon released its earnings, exceeding analyst predictions, with CEO Andy Jassy attributing part of this success to the company's investments in AI, which he mentioned were seeing year-over-year growth in the triple digits.

Apple, AI, Stocks