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Apple continues to capitalize on the artificial intelligence boom while avoiding the massive infrastructure spending that burdens its industry competitors, according to the company’s latest earnings report. Overall, Apple recorded its best-ever fiscal year for revenue and earnings per share, driven by strong growth in iPhone and Mac sales during the fourth quarter.
Record Financial Results and AI Focus
iPhone revenue climbed 17.5 percent from the previous year to reach a September quarter record of $57.6 billion, while Mac revenue rose 24 percent to $10.8 billion, marking its highest level in four years. Despite the strong performance, shares fell in premarket trading after Apple warned that rising memory costs would squeeze profit margins during the upcoming holiday quarter.
Although Apple has not specified how much of its revenue growth stems from AI demand or higher pricing, executives view the technology as a key driver for future sales. During the earnings call, CFO Kevan Parekh highlighted a wide range of ways that AI can contribute to revenue growth over time, pointing to products that offer compelling upgrade reasons alongside opportunities in third-party partnerships and first-party offerings.
Mentions of AI and Apple Intelligence reached a record 45 times on the earnings call, according to financial research platform AlphaSense. Chief Executive Officer John Ternus, speaking on his first earnings call in the role, emphasized that the company sees tremendous opportunity in the technology.
Low Infrastructure Spending and Diverse Partnerships
Apple is positioning itself as the primary interface for consumers to access AI, including tools developed by competitors. With more than 2.5 billion active devices, the company holds an enormous audience for emerging AI services. Unlike other major technology firms, Apple relies on a combined approach of on-device processing, its own servers, and outside AI technology, such as Siri AI models developed with Google’s Gemini technology. Reports also indicate Apple plans to let users choose among outside AI providers for specific features.
Capital expenditures reached $2.2 billion last quarter, remaining a small fraction of the spending reported by competitors like Amazon at $77.3 billion and Alphabet at $51.4 billion. Meanwhile, Apple’s operating expenses rose 21 percent to $19.2 billion due to increased research and development spending, including investments in AI.
Hardware Demand and Subscription Opportunities
Apple is leveraging increased AI usage to boost hardware sales, noting that the Mac lineup is experiencing its own AI moment. Corporate clients are utilizing Apple computers to run local AI models, such as Gap deploying Mac Mini computers for loss prevention across hundreds of stores and Christie’s using Mac Studio computers to improve pricing estimates.
The company also plans to generate subscription revenue from AI features. Ternus explained that features relying on server-side models, including Siri AI and intelligent photo editing, will feature usage limits, with customers able to purchase expanded access in the future through expanded iCloud capabilities.
Additionally, Apple collects commission revenue when customers subscribe to third-party AI apps through the App Store. Analytics firm AppMagic previously estimated that Apple is on track to bring in more than $1 billion in App Store fees from generative AI apps in 2026, though certain competitors like OpenAI have begun directing users to pay through external websites to bypass commissions.
Apple maintains multiple streams to benefit from consumer AI usage by selling hardware, collecting subscription commissions, and eventually charging for expanded services without funding infrastructure on the scale of its competitors.
