Apple sales slump continues as it unveils its AI plans

Jumping on the artificial intelligence (AI) bandwagon, Apple CEO Tim Cook said that the Cupertino-based firm is investing heavily in AI even as the tech giant reported declining sales numbers.

The announcement was made on Thursday (Aug 3) as Apple recorded its third straight quarter of fall in sales and predicted a similar performance in the current period—the company’s most prolonged sales slump since 2016.

Weak iPhone sales

In the third fiscal quarter ending July 1, Apple’s sales fell 1.4 per cent to $81.8 billion, according to IBES data from Refinitiv.

However, the company made a profit of $19.9bn over the quarter, higher than analysts had expected.

iPhone sales were weaker than the analyst estimates, but it was balanced by strong sales in the services segment that contains AppleTV+ and by sales in China that grew 8 per cent year over year, according to Reuters.

The iPhone sales in India also grew double-digits, however, the executives didn’t share the exact numbers.

Apple to invest heavily in generative AI

Speaking to the Reuters news agency, Tim Cook said that the company’s main focus is on generative artificial intelligence and added that a significant amount of R&D has been dedicated to the field, which has been witnessing big spending by its technology rivals Alphabet and Microsoft.

“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,” Cook said.

“Obviously, we’re investing a lot, and it is showing up in the R&D spending that you’re looking at.”

Apple has upped its research and development spending to around $22.61bn for the fiscal year so far, which is about $3.12bn higher than at this point in the previous year.

Apple has pegged the gross profit margin in the September quarter at 44 per cent to 45 per cent, above analyst expectations of 43.4 per cent, according to Refinitiv data.

While Apple expects growth in its service segment that contains Apple TV+, iPad and Mac sales will fall by "double digits," Apple Chief Financial Officer Luca Maestri told Reuters.

(With inputs from agencies)

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