Apple delivered blockbuster earnings results for its holiday quarter, with CEO Tim Cook attributing much of the success to “staggering” and “unprecedented” iPhone demand. The tech giant reported revenue of $143.76 billion and earnings per share of $2.84, both significantly exceeding analyst expectations.
A major highlight of the earnings call was Apple’s discussion of its AI strategy and partnership with Google. Cook revealed that Google will help power Apple’s AI efforts, including a long-awaited Siri overhaul “coming this year.” The CEO characterized the relationship between Google and Apple’s Foundation Models (AFM) as a “collaboration,” emphasizing that Apple is “very happy” with the partnership. Cook stated that Google will provide the “most capable” foundation for Apple’s AI models while maintaining the company’s commitment to user privacy.
Greater China emerged as a bright spot, with revenue reaching $25.53 billion, up 38% year-over-year, crushing consensus estimates of $21.82 billion. This marked a significant turnaround after Cook had vowed to reverse declining China sales in the previous quarter. The CEO noted that traffic in Chinese stores grew by double digits, and the iPhone ranked among the top three smartphones in urban China.
However, Apple faces challenges from the AI-driven memory shortage. Cook acknowledged that memory prices have soared amid the AI boom and expects them to continue increasing. When asked if Apple would raise prices to offset rising memory costs, Cook declined to speculate but noted that supply chain constraints are tighter than normal.
The company’s services business continued its strong performance, generating $30.01 billion in revenue, up 14% year-over-year. Apple now has over 2.5 billion active devices worldwide, a new record. Cook expressed optimism about Apple’s AI monetization strategy, stating the company is “bringing intelligence to more of what people love” and “integrating it across the operating system in a personal and private way.”
Apple’s stock rose approximately 2% in after-hours trading following the earnings announcement, reflecting investor confidence in the company’s AI strategy and overall performance.
Key Quotes
We’re bringing intelligence to more of what people love, and we’re integrating it across the operating system in a personal and private way
CEO Tim Cook explained Apple’s AI strategy during the earnings call, emphasizing the company’s approach to AI integration while maintaining its privacy-first philosophy. This statement signals how Apple plans to differentiate its AI offerings from competitors.
We can unlock a lot of experiences and innovate in a key way due to collaboration
Cook described the Google partnership, highlighting how the collaboration will enable Apple to deliver advanced AI features. This marks a significant acknowledgment that even Apple needs external AI expertise to compete effectively.
The constraint, as I’ve mentioned, is due to the advanced node capacity. It’s really a result of growing so well in Q1 with the 23%
Cook explained supply chain challenges related to the AI-driven memory shortage, revealing how the AI boom is creating capacity constraints even for a company of Apple’s scale and resources.
We see both being important
When asked whether Apple’s AI efforts would focus more on on-device AI or cloud-based AI, Cook emphasized that Apple doesn’t view it as an either/or decision, indicating a hybrid approach to AI deployment.
Our Take
Apple’s earnings reveal a company in transition, strategically positioning itself in the AI era while leveraging its massive ecosystem. The Google partnership is particularly telling—it suggests Apple recognizes it cannot win the AI race alone, even with its substantial resources. This pragmatic approach contrasts with Apple’s traditional “not invented here” culture and may signal a broader industry trend toward AI collaboration over competition.
The memory shortage discussion deserves attention as it represents a tangible constraint on AI deployment at scale. If even Apple struggles with component availability and pricing, smaller players will face even greater challenges. This could lead to market consolidation as only well-capitalized companies can secure necessary components.
Most significantly, the Siri overhaul powered by Google’s AI could be a watershed moment for consumer AI adoption. With billions of Apple devices in use globally, an intelligent Siri could normalize AI interactions for mainstream users who haven’t yet embraced ChatGPT or other AI tools.
Why This Matters
This earnings report marks a pivotal moment in Apple’s AI transformation, signaling the company’s serious commitment to competing in the artificial intelligence race. The Google partnership represents a strategic shift for Apple, which has historically preferred to develop technologies in-house. By leveraging Google’s AI capabilities for its Foundation Models, Apple is acknowledging the competitive pressure from AI-native companies while attempting to maintain its privacy-focused brand identity.
The memory shortage discussion highlights a critical challenge facing the entire tech industry as AI adoption accelerates. Apple’s experience with rising memory costs and supply chain constraints demonstrates how the AI boom is creating ripple effects throughout the hardware ecosystem, potentially impacting pricing and availability across the industry.
For businesses and consumers, Apple’s Siri overhaul powered by advanced AI could significantly change how millions interact with their devices daily. As one of the world’s most widely-used voice assistants, an AI-enhanced Siri could accelerate mainstream AI adoption and set new expectations for conversational AI capabilities. The company’s success in China also suggests strong international appetite for AI-enhanced devices, which could influence how other tech companies approach global AI deployment strategies.
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Source: https://www.businessinsider.com/apple-earnings-live-updates-ai-gemini-iphone-sales-2026-1