Cook Says Apple's AI Strategy Is a 'Competitive Weapon'

Tim Cook's last earnings call as Apple CEO mixed a victory lap with a reality check. While delivering strong results and declaring he has "never been more optimistic" about Apple's future, Cook warned that severe supply constraints—especially around advanced processors and memory chips—will weigh on iPhone and Mac sales in the months ahead as he hands the reins to hardware chief John Ternus in September, Fortune reports. Apple expects iPhone revenue growth to slow to the "mid-teens" percentage range this quarter, down from 22% last quarter, with overall sales rising 9% to 10% year-over-year, short of Wall Street's 12% forecast. Shares slid more than 6% in after-hours trading.

The supply squeeze is being driven in part by the AI boom: data center demand has tightened the memory market. Cook said Apple raised Mac and iPad prices last month because of "what I would characterize as a hundred-year flood on the memory pricing." as rivals pour hundreds of billions into AI infrastructure, Apple is taking a "hybrid approach," with some AI running on devices instead of the cloud, CNBC reports. Cook described the strategy as "sort of a competitive weapon."

• While rivals Alphabet, Amazon, Meta, and Microsoft all plan to spend more than $100 billion on capital expenditures this year, mostly in AI, Apple's capex in the June quarter was just $2.46 billion. "As the market grows more worried about free cash flow trajectories elsewhere in Big Tech, Apple keeps standing out as the safe haven in the storm," said Thomas Monteiro, an analyst at Investing.com, per the AP.

Apple's second-quarter revenue rose 16% to $109.4 billion, with earnings beating expectations at $2.02 per share, thanks to a boost from tariff refunds. "Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac, and Services, and in every geographic segment," Cook said Thursday. Of Ternus, who takes over on Sept. 1, he said, "I couldn't be more confident in his leadership, in the executive team and the extraordinary people at Apple."