Apple’s Sprint Against Microsoft and Google in the AI Marathon: A Peek at the Pocket
Apple is lacing up its boots to sprint into the artificial intelligence (AI) race, eyeing the finish line where Google and Microsoft are now leading. But catching up requires loosening the purse strings, and quite significantly at that.
Analyst Ming-Chi Kuo from TF International Securities hinted that Apple is ready to splash the cash, with billions earmarked for Nvidia’s AI chips to power this race. The starting line begins with a $620 million investment in AI servers this year, accelerating to a staggering $4.75 billion next year as the next fiscal year rolls around. This projection is based on Apple grabbing 2,000 to 3,000 AI server units this year and then going big with 18,000 to 20,000 units the next.
Kuo believes Apple will go for the crowd-favourite AI server setup – eight networked Nvidia H100 chips. Though, the current chip shortage means Apple’s shopping spree will likely hit full stride in 2024.
Even with such hefty spending, Apple is still playing catch-up. Meta Platforms, the parent company of Facebook, has already pumped billions into AI and plans to keep the financial faucet open. In 2024 alone, Meta is expected to snag around 40,000 AI server units, says Kuo.
Rumoured Plans: Apple’s Silent Strategy on AI
Apple has kept its AI cards close to its chest, unlike Microsoft and Google who’ve laid their AI offerings on the table. But, whispers in the tech corridors suggest Apple is setting aside around $1 billion a year to up its AI game, with an upgraded Siri possibly making a debut next year.As the end of this quarter fiscal year approach, the tech community is buzzing with anticipation on what Apple’s financial commitment towards AI will unveil in the competitive landscape.
Anticipated Fiscal Q4 Earnings: A Window to Apple’s AI Blueprint
Now, come the end of the year 2023, Apple’s quarter fiscal year earnings report might just offer a glimpse into its AI ambitions. With a stock price that soared over 30% this year, and a new iPhone in the mix, the earnings call is quite the talk of the town. Analysts are buzzing about expected earnings of $1.39 per share on an $89.31 billion revenue forecast. That’s a significant jump from the last quarter’s $1.26 per share on $81.79 billion revenue, showing Apple’s financial muscles flexing even with a slight dip in revenue.
This earnings call, covering July through September, is crucial for investors and analysts hungry for clues on Apple’s financial health and the sales figures of the new products unveiled last month.
Stock Performance: Reflecting Market Confidence
As for Apple’s stock (AAPL), it kicked off 2023 at $130.28 and danced its way up to a peak of $198.23 on July 19. The stock has still climbed over 30% this year, despite trailing below its peak.
With an estimated earnings per share (EPS) of $1.39, up by $0.20 from last quarter’s forecast, Apple is in a sweet spot, especially after exceeding the previous quarter’s estimate by 5.49% with an EPS of $1.26. And the revenue forecast is sunny too at $89.31 billion, up from the last quarter’s $81.80 billion, which Apple hit right on the mark.
Now, the stock price might jitter a bit post-earnings announcement, which is quite understandable according to the stormy seas other big tech names are sailing through around their earnings announcements.
While there’s some chatter about international sales of new and existing iPhones, especially in China, the upbeat EPS and revenue forecasts for the upcoming quarter seem to keep the market spirits high.
Final Thoughts
As Apple steps up to the plate to take on Microsoft and Google in the artificial intelligence (AI) game, it’s clear they’ll need to dig deep into their pockets. Everyone’s got their eyes on the upcoming earnings report, hoping to get a peek at Apple’s game plan for AI. The stock has been doing a happy dance, climbing over 30% this year, showing that investors are still betting big on Apple.
Although there’s a bit of a worry about how well the new and existing iPhones are selling internationally, especially in China, the high hopes for earnings and revenue are keeping spirits high. So, when the report goes live, all eyes will be glued to Apple’s numbers, looking for hints on how Apple plans to run this race against the tech bigwigs in the AI field.
