Apple exceeded expectations when it did presented its quarterly earnings on Thursday, revealing that it had revenue of $143.8 billion, up 16% year over year. As analysts peppered CEO Tim Cook with softball questions during Apple’s earnings call, one analyst dared to ask the question that seemingly no one in Silicon Valley is willing to ask.
“When I think about your AI initiatives, you know, clearly there are additional costs associated with that… Many of your competitors have already built AI into their devices and it’s not yet clear what incremental monetization they’re seeing because of AI…” Morgan Stanley’s Erik Woodring began.
Could there be a tinge of nervousness beneath the probably-too-economical facade of this economical man? In what I can only imagine must have been a herculean display of courage, Woodring asked the question that lurks only in the darkest, wet recesses of the investor mind.
“So how do you monetize AI?” he asked.
You’d think this would come up more. You would be wrong. Instead, Big Tech has taken a vibration-based approach to AI development. Take OpenAI, for example, which may seem like it’s on top of the world given how ChatGPT has become embedded in the cultural consciousness. But the company he doesn’t plan to make money by 2030. HBSC analysts are even dubious about that timeline, especially since it would require another $207 billion in funding, estimates say. Ask any techie how OpenAI plans to balance and you’ll be met with the verbal equivalent of the emoticon icon ¯\_(ツ)_/¯.
But good Tim “$143.8 billion in revenue” Cook was having a good afternoon, so maybe he’ll finally spill the beans on how some of these companies plan to recoup their investments.
His answer was disappointing.
“So let me just say that we’re bringing intelligence to more of what people love and building it into the operating system in a personal and private way, and I think that’s creating a lot of value and opening up a range of opportunities in our products and services,” Cook said.
So there you have it, guys. Apple will monetize AI by creating “great value.” And, very importantly, this will “open up a range of opportunities”. Which we will experience in “products and services”. Cool!
Well, shout out to the Morgan Stanley guy who tried.
