Apple posted its best-ever fiscal year for revenue and earnings per share, driven by strong growth in iPhone and Mac sales. iPhone revenue rose 17.5% from a year earlier to a September quarter record of $57.6 billion, while Mac revenue climbed 24% to $10.8 billion, marking its highest level in four years. Despite the record performance, shares fell in premarket trading Tuesday after the company warned that rising memory costs could squeeze profit margins during the holiday quarter.
During the quarterly earnings call, executives emphasized the role of artificial intelligence in driving future sales. CFO Kevan Parekh noted a wide range of ways AI could contribute to revenue growth over time, specifically highlighting how the technology encourages hardware upgrades. "On the product side, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities," Parekh said.
Apple's strategy involves a mix of on-device processing, proprietary servers, and third-party technology. Unlike many Big Tech peers, the company is not spending comparable sums on infrastructure; Apple reported $2.2 billion in capital expenditures last quarter, significantly lower than the tens of billions reported by Amazon and Alphabet. Operating expenses rose 21% to $19.2 billion as the company increased research and development spending, including for AI.
The company is positioning itself as the primary interface for AI services, leveraging a user base of more than 2.5 billion active devices. This includes integrating models from competitors, such as Google’s Gemini technology for Siri AI, and potentially allowing users to choose from various outside AI providers for writing and image generation tools.
Apple plans to monetize increased AI usage through subscription models. Executive John Ternus stated that features relying on server-side models, such as Siri AI and intelligent photo editing, will have usage limits. Customers requiring more capacity will be able to purchase expanded access in the future, a move that builds upon the existing iCloud subscription structure.
Beyond services, the company expects hardware demand to rise as users seek devices capable of running AI locally. Ternus noted that the Mac is currently "having an AI moment all its own" as customers seek the latest capabilities for generative tasks.
