Apple reported quarterly earnings Thursday, saying it beat expectations and generated $143.8 billion in revenue, up 16% from a year ago. As analysts bombarded CEO Tim Cook with softball questions during Apple’s earnings call, one analyst dared to ask a question no one in Silicon Valley seemed to want to ask.
Morgan Stanley’s Erik Woodring said, “When you think about your company’s AI initiatives, it’s clear that there are additional costs associated with them… Many of your competitors have already integrated AI into their devices, and it’s not yet clear what kind of incremental revenue generation AI is driving…”
Could there be some tension beneath this finance man’s perhaps very financial exterior? What I can only imagine was an incredible display of courage. Woodring asked a question that lurks only in the darkest, dankest recesses of investors’ minds.
“So how do you monetize AI?” he asked.
I think you can expect more of this to come out. You would be wrong. Instead, Big Tech has taken a largely mood-driven approach to AI development. For example, consider OpenAI, which may seem like the best in the world considering how ChatGPT has become embedded in the cultural consciousness. But the company doesn’t plan to make money until 2030. Analysts at HBSC estimate they are skeptical about that timeline, especially because it would require $207 billion in additional funding. Ask anyone in technology how OpenAI plans to break even and you’ll likely encounter the language equivalent of the ̅\_(ツ)_/̅ emoji.
But “$143.8 billion in sales” Tim Cook was having a fun afternoon, so perhaps he’s finally spilled the beans about which of these companies plans to recoup his investment.
His answer was disappointing.
“We’re bringing intelligence to more of what people love and integrating it across our operating systems in a personal and private way, and we believe that in doing so we’re creating great value and opening up a variety of opportunities across our products and services,” Cook said.
So here it is, folks. Apple will monetize AI by creating “big value.” And crucially, this will “open up a variety of opportunities”. We will experience it through “Products and Services”. cool!
Well, I’d like to thank the folks at Morgan Stanley for trying.
