Apple is poised to unveil its strategy for infusing generative AI into its iPhones, aiming to rejuvenate sales in the pivotal Chinese market amidst anticipation of the tech giant reporting its most significant quarterly revenue decline in over a year.
Renowned for its coveted status on Wall Street, Apple has faced mounting pressure in recent months as its shares have lagged behind other prominent Big Tech firms, shedding more than 10 percent since the beginning of the year.
Concerns have mounted over the company’s sluggish rollout of artificial intelligence services, compounded by Huawei’s resurgence, which has garnered market share in China.
Analysts anticipate a notable decline in iPhone sales, which constitute approximately half of Apple’s revenue. A projected 10.4 percent drop in the first quarter of 2024 would mark the most significant decline in over three years.
While attributing part of this decline to the exceptionally high iPhone revenue recorded a year ago, Apple executives underscore the lingering impact of disruptions stemming from COVID-19-related lockdowns in China, which hindered iPhone production.
Amidst these challenges, Apple’s market value has retreated, relinquishing its title as the world’s most valuable company to Microsoft. With a market value currently standing at $2.68 trillion, Apple aims to revitalize its flagship device through strategic collaborations with OpenAI and Alphabet-owned Google to integrate genAI features into the iPhone.
These features are anticipated to be unveiled at the forthcoming annual developer conference in June, potentially driving demand for the upcoming iPhone series slated for release in the fall.
While tech industry counterparts have articulated robust AI strategies in recent quarterly calls, Apple CEO Tim Cook has remained relatively reticent about the company’s AI initiatives. However, industry analysts assert that integrating AI capabilities into iPhones could bolster Apple’s competitiveness against rivals such as Huawei and Samsung Electronics, particularly in light of the latter’s recent resurgence propelled by demand for AI features in its Galaxy S24 smartphones.
The anticipation surrounding Apple’s quarterly earnings announcement also centers on updates regarding the company’s stock buyback plan and the performance of its latest product offering, the Vision Pro headset.
Initial enthusiasm for the $3,500 device has tapered, with signs of slowing demand prompting speculation about Apple revising its production estimates for the mixed-reality headset.
Moreover, Apple’s hardware business faces headwinds, with subdued demand anticipated for iPads and Macs, reflecting projected declines of 11.4 percent and 4.3 percent, respectively, in the March quarter. In response, Apple is sharpening its focus on hardware innovations, with plans to unveil a revamped iPad lineup and update every Mac model with faster, AI-focused M4 processors.
Despite these challenges, Apple’s services business remains a bright spot, with anticipated revenue growth of 7.7 percent driven by robust performance in segments like the App Store and subscription services like Apple TV.
