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Apple achieved its best June quarter performance in history. In the earnings call after the results, Cook said he was very excited about "Apple intelligence" and would increase investment in AI year by year.

Overnight, Apple delivered a brilliant financial report, with revenue and profit exceeding expectations for six consecutive quarters, setting a record for total revenue and EPS in the June quarter. Apple CEO Cook and CFO Luca Maestri provided interpretations of the company's performance, service business growth, and artificial intelligence plans in the earnings conference call.

Apple has performed particularly well in its services business and iPad sales, and is also actively developing AI. However, Apple will still face challenges in the coming quarters due to slowing growth in its iPhone and Mac businesses and increasing regulatory pressure.

Looking ahead to the third quarter, Apple expects revenue to grow year-on-year, with a growth rate similar to that in the second quarter, and service business revenue is expected to maintain double-digit growth, with gross margin expected to be between 45.5% and 46.6%. The following are the highlights of this earnings conference:

Apple increases investment in AI, and will gradually launch intelligence within the year

Cook was optimistic about the company's efforts in artificial intelligence.

Cook said he was "very excited" about Apple Intelligence, the company's upcoming artificial intelligence platform that will provide text summarization, image generation and other capabilities to iPhone users.

Cook said:

Apple Intelligence will be launched in phases, with some features coming online this year. Languages ​​other than American English will not be available at launch. It is expected that Siri will integrate ChatGPT features by the end of this year.

Cook also said that Apple is increasing its investment in artificial intelligence and machine learning, and plans to increase its investment year by year in preparation for the launch of Apple Intelligence this fall.

Cook said Apple has been investing more and reallocating more resources to develop Apple Intelligence, and this quarter's results reflect year-over-year growth in AI spending:

What we did is we moved a lot of people who were doing other things into the AI ​​department, and from a data center perspective, we have a hybrid approach. So we have both our own data centers and partners. The capital expenditure will be borne by the partners, and we will pay for it.

iPhone 15 series outperforms iPhone 14, iPad sales increase significantly

Cook said the iPhone 15 series performed better than the iPhone 14 series. In the quarter ending in June, the installed base of iPhones hit a record high.

Speaking of the upcoming iPhone 16, Cook said:

The company is "very excited" about Apple Intelligence and the value it brings to users, believing it will be another powerful reason for users to upgrade.

Although Apple Intelligence features will be available as free updates with iOS 18 and macOS 15, they require the latest Apple devices — such as M1 or later iPads and Macs or iPhone 15 Pro. The new iPhone 16 models to be released this fall will also be compatible with Apple Intelligence, which may encourage more people to buy new phones.

Specifically, iPhone revenue fell slightly by 1% to $39.3 billion, Mac revenue increased by 2% to $7 billion, and home, accessories and wearable device revenue fell by 2% to $8.1 billion. Thanks to the launch of iPad Pro (M4) and iPad Air (M2), iPad sales increased significantly, and iPad revenue reached $7.2 billion, a year-on-year increase of 24%.

Service business hits new high

Service revenue reached $24.2 billion, a record high, up 14.2% year-on-year. The number of paid subscribers exceeded 1 billion, a record high, and advertising, cloud services and payment services all set new records.

Luca Maestri, Apple’s chief financial officer, said:

Seeing customer engagement with its ecosystem continue to grow, Apple is doing "very well" to improve the quality of its services and increase the amount of content available, and plans to continue adding new Apple TV+ and Apple Arcade content.

Facing regulatory challenges

Maestri said Apple is continuing discussions with the European Commission about its Digital Markets Act compliance. Apple has seen "great uptake" from developers for the changes, and overall, the performance of the services business and the App Store has been "quite good so far," he said.

Maestri reiterated that the App Store accounts for 7% of Apple's total revenue in the EU.

Cook said:

Apple is working to understand regulatory requirements before launching Apple Intelligence in the EU. Apple Intelligence features will not be available in the EU when iOS 18, iPadOS 18, and macOS Sequoia are released.