Apple Will Soon Reveal Artificial Intelligence Plans

JAKARTA In recent years, Apple’s Chief Executive, Tim Cook, has answered questions from Wall Street analysts about his plans for artificial intelligence and complaints that the iPhone maker has no exciting AI plans.

After the company reported quarterly revenue on Thursday, May 2, Cook insisted that Apple would soon have concrete details on its plans for the AI to be discussed.

“We continue to feel very optimistic about our chances in a generating AI and we are making significant investments,” Cook said. He noted that Apple has spent $ 100 billion (IDR 1,597 trillion) in the last five years on research and development.

Apple’s major rivals in the tech industry have also issued comparable or even larger amounts for R&D over the same period. But they have also spent a lot of effort building data centers to host AI services.

Microsoft spent 14 billion US dollars (Rp223.5 trillion) in the last quarter on capex, while Alphabet’s Google is not far behind, amounting to 12 billion US dollars (Rp191.6 trillion). Meta Platforms notified investors last week of expecting as much as 40 billion US dollars (Rp638.7 trillion) in capital spending this year.

Apple thinks differently. His spending for the whole year 2023 was only slightly more than 10 billion US dollars (Rp159 trillion).

Apple, which makes most of its money from the sale of consumer devices, has paid the price for the stance largely this year, with its shares down 10% as investors fear the company is lagging behind in the AI race.

On Friday, May 3, Apple’s shares rose 6.4%, recovering part of the recent loss.

Shares of Meta, Google and Microsoft – all making money from software sales or advertising services – have all jumped to record highs as these companies struggle to dominate the emerging AI landscape, although investors are also surprised by the prices of data centers and specific processors needed to train AI models.

Apple hinted on Thursday that the company would not take the same approach. Although it is hoped that Apple will reveal new AI features at its annual software conference next month and update its product line with the AI-ready chip, Chief Financial Officer Luca Maestri told investors Apple should not expect major changes in how the company handles capital spending.

In response to an analyst’s question, Maestri noted the company’s long-term practice of dividing manufacturing costs with its suppliers, which has kept Apple’s costs low and its cash income for more than a decade.

“We did the same on the data center side,” Maestri said. “We have our own data center capacity, and then we use capacity from third parties. This is a model that has worked for us historically, and we plan to proceed in the same way going forward.”

It may be fine for Apple, because it’s still unclear whether AI features like chatbots running directly on devices will encourage users to buy new phones, tablets, or laptops, which remain Apple’s biggest source of revenue and profit.

Ben Bajarin of Creative Strategies said that while a better processor could serve as a “boundary line” for some users who need AI tools for professional use, these features may not trigger a spike in sales.

“That’s going to be something that helps increase sales, but I don’t expect it to be a super cycle,” Bajarin said. “You have to be careful to ease expectations.”

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