Apple's costs are increasing as a result of investments in generative AI, confirms Tim Cook

 After Apple stated that the sales decline might continue in the current quarter, its stock fell by about 2 percent. Amid the recent AI-related investments and growing analysts' belief in the rise in the value of Apple's share in the third quarter of 2023, the downfall in the share prices is predicted. 

Sources have confirmed that the Cupertino-based company stated on Thursday that its revenue for the three months that ended on 1 July 2023 dropped 1.4 percent to roughly $81.8 billion while its earnings per share increased by 5 percent to $1.26. 

Overall, the revenue and profitability figures are higher than analysts' expectations of $81.69 billion and $1.19 per share.

Apple’s Take on the current situation 

In the current fiscal year, Apple has spent $22.61 billion on research and development, or about $3.12 billion more than the previous two years combined. As per recent information, the company's development of generative AI technology has been connected to the surge in R&D investment.  

"We've been doing research across a wide range of AI technologies, including generative AI, for years. We're going to continue investing and innovating and responsibly advancing our products with these technologies to help enrich people's lives," said Tim Cook. 
 
According to Apple CFO, Luca Maestri, on the strength of growth in its services division, which includes items like AppleTV, iPad, and Mac sales, the company is anticipating a year-over-year revenue performance in the company's fourth fiscal year, which ends in September 2023. For the September quarter, Apple expects its gross profit margin to be between 44 and 45 percent. 

Sales may improve in the fourth quarter 

While sales of Apple's most famous product, the iPhone, have fallen short of expectations and disappointed investors, growth in China and robust sales of products like Apple TV have helped to partially offset those numbers. Moreover, sales of iPhones are anticipated to increase in the fourth quarter, according to Apple executives. 

The iPhone appears to be facing severe competition in a smartphone market that is becoming more established, and the tech giant's latest, ground-breaking product, the Vision Pro mixed reality headset, has yet to reach consumers.