John Ternus, who has taken charge of Apple Inc as CEO, inherits a mixed bag of fortune. The company, worth some $4.6 trillion, has more than 2.5 billion active devices in people’s hands and an enviable cash pile, but is widely seen as an artificial intelligence (AI) laggard.
John Ternus, who has taken charge of Apple Inc as CEO, inherits a mixed bag of fortune. The company, worth some $4.6 trillion, has more than 2.5 billion active devices in people’s hands and an enviable cash pile, but is widely seen as an artificial intelligence (AI) laggard.
The iPhone marketer was late to Generative AI, has yet to wow users with Agentic AI, and earned eyerolls with its first attempt at AI-run Siri assistance. For its AI services, it mostly relies on Google’s Gemini. Apple Intelligence, its own version of this technology marvel, has been thinking different.
The iPhone marketer was late to Generative AI, has yet to wow users with Agentic AI, and earned eyerolls with its first attempt at AI-run Siri assistance. For its AI services, it mostly relies on Google’s Gemini. Apple Intelligence, its own version of this technology marvel, has been thinking different.
While Microsoft, Meta, Alphabet and Amazon invest big capital in data centres and AI infrastructure, a capex race that some investors fear has overheated, the Financial Times estimates that only about $51 billion of Apple’s $383 billion in assets are fixed. This levity sets it apart from the balance sheets of other Big Tech majors.
Apple’s financial heft offers Ternus plenty of space to manoeuvre. It generated $109.4 billion in revenue in its June quarter, up 16% year-on-year. Gross margins have hovered around 46-50% over the past year, while its net cash is placed above $62 billion.
This gives investors the comfort that Apple can fund its AI game without quick returns from this hot frontier of technology. It has begun filling AI gaps.
It snapped up Canadian AI company DarwinAI, which rejigged neural networks for model-use efficiency. It bought French startup Datakalab, a specialist in on-device AI and computer vision.
This year, it paid nearly $2 billion for Israeli AI startup Q.ai, even as it explored acquisitions of AI-chip firms for its server processors.
Apple’s gadget wins have stemmed from its mastery of design and user interfaces. Co-founder Steve Jobs sought novel fusions of hardware and software. Tim Cook gave the business an industrial boost, turning its supply chain, custom silicon and installed base into a mega profit spinner.
While Cook will stay on as executive chairman, Ternus is likely to reshape the product portfolio.
In terms of market addressal, Apple has an edge granted by access to iPhone users, among others. Instead of chasing OpenAI or Google, it can push intelligence deeper into its range of devices. Its new Siri AI hints of it. Q.ai’s tech could go into AirPods or Vision Pro.
On the flip side, the smartphone-upgrade cycle has grown weary and the company faces global antitrust scrutiny for what it charges apps in need of market access, even as reliance on others for AI would risk its gadgets losing appeal should a wave of AI-gizmo rivalry arise.
Its commitment to privacy is seen to constrain its speed in this race, although its launch of agentic tools in Xcode gave it a bump-up in developer esteem. Last but not least, if its bet on custom chips and edge models fails to deliver truly transformative AI, Apple could find itself selling pricey hardware in a market defined by cloud-based intelligence.
From India’s point of view, with about a quarter of its iPhones made in factories here, we need a larger bite of its global value chain. From Ternus’s perspective, Apple must get its outlays right. It has lifted its R&D spend to a bit over 10% of revenue.
As an engineer who oversaw the success of its A- and M-series of custom processors, Ternus need not make a “dent in the universe,” but must still show investors how Apple’s new AI chips, products and services can churn out profits without letting the capital discipline slacken that has made Apple so valuable.