While artificial intelligence (AI) has become a buzzword for every tech company today, Apple seems to stand as an exception.
Following the earnings calls this week, Alphabet CEO Sundar Pichai and his team mentioned "AI" 66 times, while Microsoft CEO Satya Nadella and his executives mentioned it 47 times. Meta's management mentioned it 42 times.
However, Apple has remained relatively silent about artificial intelligence. The market should not expect to hear much about AI in the company's upcoming earnings report next week.
The tech giant's reserved stance towards this new technology stands in stark contrast with its competitors. In May, during Apple's earnings call, CEO Tim Cook only mentioned artificial intelligence twice, and that too when responding to questions. During Apple's two-hour software presentation in June, despite the announcement of several new features driven by AI, the term was never mentioned by the company's executives.
Despite its limited mention of artificial intelligence, Apple is far from lacking in its application.
The executives at Apple prefer using the term "machine learning," which is more favored by scholars and practitioners. Unlike other tech companies that portray AI as an all-powerful, almost magical technology, Apple executives prefer to discuss what its software does for users, such as organizing photos, improving typing systems, or editing PDF files.
Apple treats AI more as a fundamental underlying component, not a tool to paint a future picture, offering an alternative way to present the technology to consumers. Apple's AI operates in the background, and the company doesn't make a big fuss about it, as it doesn't feel the need to.
Looking at the executive comments from this week's earnings calls, despite the eagerness of Meta, Microsoft, and Google to provide tools for consumers in the AI gold rush, such as cloud services and developer tools, it remains unclear how AI will reshape these companies' most critical businesses and products, or when the benefits of AI will start to reflect in earnings reports. These tech giants agreed during the earnings calls that the positive impact of AI products on the companies' financial situations might take some time.
Some analysts believe that tech giants slowly rolling out products related to a new technology during its early hype stage is a better strategy. According to research by analyst firm Gartner, many industry insiders believe that a new foundational technology goes through a "hype cycle."
The hype cycle model suggests that when a new technology is introduced, it attracts a lot of attention and investment because it reaches a "peak of inflated expectations." However, as the deployment of the technology is slower than initially expected, enthusiasm and investment dry up before it matures and becomes profitable, plunging into a "trough of disillusionment."
This year, NVIDIA's stock price has risen 220% as investors have recognized the importance of its graphic processing units for AI technology.
However, if everyday applications of AI fail to gain traction, many AI companies could once again find themselves in a trough of disillusionment. For instance, earlier this month, analysts found that downloads of OpenAI's iOS app, launched in May, had slowed down.
Some analysts are beginning to realize that investment opportunities based on new AI products will not appear immediately and may lead to increased costs if companies lean into this direction.
Morgan Stanley cautioned investors that converting early demand into widespread implementation and confirmed revenue is a multi-year trend, not an instant transition.
UBS believes that generative AI remains a "question mark" for Google:
Google's management is optimistic about the ability to provide 'deeper and wider' solutions through search-generated experiences, but we do not believe the company is out of the woods yet.
When Apple releases its earnings report next week, analysts might press the company to disclose its AI plans, given the industry's obsession. However, market expectations suggest that Apple is unlikely to discuss its AI plans in as much detail as its major competitors.
In the previous Apple earnings call, when asked about this technology, Cook stated that they regard AI as very important and will continue to thoughtfully incorporate it into their products.
