APPLE: The Godfather of 21st Century Tech & Innovation Earnings are out.

Yes! Apple IS the Godfather of 21st century Innovation/Technology. Let’s go back in time. It started October 2001 with The iPod. Remember that? We had the iTunes Store to go with our fresh out the box iPod and that was our first introduction to the Apple Ecosystem. Then in June 2007, the holy grail of not only mobile but modern day technology was created, The iPhone! A transformative product that revolutionized not only the tech world but society as a whole. Think about it. The iPhone changed how humans interact with each other.

In 2025, most of us can not function without our mobile phone for more than a couple of hours. A large portion of people would be lost without that mini-supercomputer close by their side. That is what you call innovative dependency. I just made that term up!

With that said, the iPhone was 20 years ago. Where is Apple now? We haven’t heard nor seen much innovation from Apple in the last few years at all. A.I. is the new frontier technology. Apple has been rather quiet on that front. We will touch on where Apple is with A.I., but first, the latest quarter’s results.

The Results

Headline Numbers

• Revenues: Actual: $94.04B vs. Estimate: $89.3B (Beat)

• EPS : Actual: $1.57 vs. Estimate: $1.43 (Beat)

• iPhone Revenue: Actual: $44.58B vs. Estimate: $40.06B (Beat)

• Services Revenue: Actual: $27.42B vs. Estimate: $26.85B (Beat)

• China Revenue: Actual $15.37B vs. Estimate: $15.19B (Beat)

Apple had an across the board beat-filled quarter where they exceeded expectations on all key metrics. The Services Business, (Apple was very proud of this unit’s performance on their earnings call) a key focus for the long-term strategy, set an all-time high record revenue. Apple Services entails the App Store, Apple Music, and iCloud. The Services unit is a recurring revenue stream that balances Apple’s more cyclical Hardware sector.

Apple’s Hardware Business (iPhone, iPad, iMac, Apple Watch) saw an increase in Revenue of 13% YoY (see chart above), iMac saw a 15% increase in Revenue YoY. On the other hand, iPad and Wearables did not experience the same level of growth as iPhone and iMac, but still contributed billions in Revenue.

Aftermarket Reaction

The market favored Apple’s earnings report. Aftermarket Apple was up a modest, 2.5%. Not quite the 10%+ Microsoft and META gapped up on Wednesday but still respectable. The expectations from The Street were low. The question here is, why didn’t Apple have an explosive aftermarket reaction? The answer is easy. There was no exciting A.I. news. The proof is in the pudding. The chart below tells the story.

Apple Stock Performance over the last 12 months vs. Tech competition:

In the chart above, in comparison to its tech peers, Apple has underperformed declining 6% over the last 12 months. Microsoft, META & Google have taken off and are trading comfortably at or near all-time highs. This non-movement in the stock price over the year has been due to Apple’s lack of a meaningful A.I. strategy.

Enough of the numbers and charts. What has really been going on here? Why is Apple not at the forefront of A.I.?

META (Facebook)

META (Facebook) has absolutely snatched what could have been Apple’s lunch. Why would I say this? I’m not a tech know-it-all geek but I have been observing. META has been able to leverage A.I. by embedding it in their multiple platforms. Think about it. There are META A.I. assistants on Facebook, Instagram, and WhatsApp. To me, the A.I. presence is more prominent on WhatsApp, which is international-focused.

For almost a decade, Mark Zuckerberg, CEO of META, could not figure out what to do with WhatsApp. He has found a purpose for it. Now what does META embedding an A.I. Assistant into their apps have to do with Apple? What device are people using to get on any one of Zuckerberg’s three app? In the United States of America, it’s either a Samsung or…….an iPhone. If Zuckerberg has billions of DAU’s (Daily Active Users) & MAU’s (Monthly Active Users), he knows he has scale for this technology. Zuckerberg’s users don’t need to log onto ChatGPT while using any of of his apps. The A.I. assistant is right there! However, a mobile device needs to be the incubator to get those users to his platform. Just like META has in-house users, iPhone is the actual host. So how could Apple have leveraged their users to get ahead in the A.I. race?

SIRI

I am one of the loyal Apple users people poke fun at. I make fun of family members who own a Samsung phone. With that said, I can count on one hand how many times I have used SIRI. I understand it is a voice-based assistant. However, that technology should have been ChatGPT before ChatGPT.

SIRI was first introduced in 2011. That was 11 years before ChatGPT came out of nowhere winter 2022. Imagine if Apple had used SIRI as an A.I. Assistant. They had the in-house talent to come up with the idea and money was far from a problem. If SIRI was executed properly, the hardware portion of Apple’s business (iPhone, iMac, iPad, & AppleWatch) would be an afterthought. Apple would not have to rely so heavily on that side of the business. Innovative software is what has taken the Microsofts, Googles, Oracles and Amazons to the next level. Apple is still stuck on Hardware.

A.I. Talent Defection

Yet, another reason why I started this section with META. Make no mistake about it. Zuckerberg IS trolling Apple. He is taking Apple’s top talent and not only strengthening his A.I. position but weakening his competition in the space. This is not by coincidence. Zuckerberg is aware Apple is going to need to do something to keep pace. My business mind is thinking, if you take in-house talent away from your competition, this will force them to overpay to replace them or make a desperate acquisition for an A.I. player. If enough talent leaves, you will no longer have the horsepower to innovate or produce something revolutionary. You will be forced to pay up to compete. Zuckerberg understands this.

My Thoughts

Is the game over for Apple? Absolutely not. Yes. It is true that Google has Gemini. X has Grok. OpenAI has ChatGPT and Facebook has its embedded A.I. Assistant across its platforms for its users. However, when you’re Apple and you have a war chest of cash on your balance sheet, $133 Billion to be exact, money is not an issue. The rumors are that Apple is looking at acquiring Perplexity. Sure, they could do that. This is what the market wants but what is Perplexity under Apple going to bring that’s different from what Claude, Gemini, Grok or ChatGPT already do? On yesterday’s call, Apple spoke on using their A.I. department, Apple Intelligence, to further enhance the capabilities of their existing hardware portfolio. That’s fine but is not extraordinary.

Is Apple playing coy and have bigger plans? Who knows? They will need to keep up with their competition. A.I. is continuously evolving. Everyday. Will Apple be the new Blackberry and wither away into oblivion? Of course not. However, with complacency, all fruits rot!