AI takes centre stage on the earnings call
Apple's results for the September quarter set records for the fiscal year in both revenue and earnings per share, according to The Verge. iPhone revenue rose 17.5% year on year to $57.6 billion, and Mac revenue grew 24% to $10.8 billion, the Mac's best level in four years. Shares still slipped in premarket trading on Tuesday, because Apple warned that higher memory costs would weigh on margins in the holiday quarter.
AI and Apple Intelligence came up 45 times on the call, a record, according to the research platform AlphaSense cited by The Verge. John Ternus, on his first call as CEO, said Apple sees tremendous opportunity in AI. The Verge notes that Apple has not said how much of its growth comes from AI demand and how much from higher prices.
Parekh told analysts that AI could add to revenue in several ways over time. He described it as a reason for customers to upgrade or switch to Apple devices, and he also mentioned openings in third-party apps and partnerships alongside first-party ones.
Siri AI, usage limits and a low-capex strategy
The Verge reports that Apple launched the revamped Siri AI in beta for US English users in September and added French, Japanese, Korean, Portuguese and Spanish in October. Siri AI runs on models built with Google's Gemini technology, and Apple reportedly plans to let users pick among outside AI providers for features such as writing tools and image generation.
Ternus said features that depend on server-side models, including Siri AI and intelligent photo editing, will have usage limits. People who need more capacity will be able to buy expanded access later, he said, and he compared this to iCloud tiers, which began as storage plans and have taken on more features. Parekh said it is too early to say how many requests will need servers rather than on-device processing. The Verge adds that cloud costs for Siri AI will show up in services cost of sales and could rise with usage.
On spending, Apple's capital expenditure was $2.2 billion last quarter, compared with $77.3 billion at Amazon and $51.4 billion at Alphabet. The Verge cautions that these are companywide totals that leave out some AI costs. Apple's operating expenses rose 21% to $19.2 billion, partly on higher research and development spending, including AI. Apple's approach mixes on-device processing, its own servers and outside AI technology, and The Verge says it has more than 2.5 billion active devices to sell into.
Mac demand and the App Store question
Ternus said the Mac is having an AI moment of its own. He cited Gap, which runs AI on Mac Mini computers for loss prevention across hundreds of stores and avoids cloud token costs, and Christie's, which runs local models on Mac Studio machines for tasks such as pricing estimates. The Verge adds that Tim Cook said earlier this year that demand for these machines for AI and agentic work was arriving faster than Apple expected.
Services are less clear-cut. TechCrunch reports that the App Store has been under regulatory pressure and that a slump in mobile gaming has hurt services growth. Parekh said App Store performance in the September quarter was similar to the prior year, with a record number of paid subscriptions and double-digit growth for third-party apps. He expects gaming headwinds to continue and guided services growth to 8 to 9% for the December quarter, citing headwinds from third-party licensing and an extra half percentage point of foreign exchange.
TechCrunch says Parekh did not explain what third-party app opportunities he meant. It cites a Reuters report that investors are wondering whether Apple could distribute third-party AI agents through the App Store and take a share of their revenue. TechCrunch also points to third-party estimates from August of an 18% drop in US commission revenue, with declines in Brazil and Japan after new rules there. It notes that a lawsuit by Epic Games forced Apple to let apps send users to outside payment systems. TechCrunch said it had asked Apple for more information.
Fees from other companies' AI apps
The Verge recalls a Wall Street Journal report, based on AppMagic data, that Apple was on pace to earn more than $1 billion in App Store fees from generative AI apps in 2026. The same newspaper reported that OpenAI has started steering potential subscribers to its website rather than the App Store, which sidesteps Apple's commission. The Verge concludes that Apple profits from others' AI but that those companies have reasons to look for ways around its fees.