Beyond expectations and cautious! Apple: AI has huge potential! But...

Star Technology's financial report season is coming to an end, and Apple did not disappoint the market, ending on a perfect note.

Overnight, Apple released its financial report, which showed:

Q1 revenue of $94.84 billion, higher than the expected $92.6 billion;

Adjusted earnings per share of $1.52, flat compared to the same period last year, and higher than the expected $1.43;

Gross margin of 44.3%, higher than the expected 44.1% and last year's 43.7%.

The reason why Apple's financial report exceeded expectations was mainly due to Apple's sales revenue of $51.33 billion, significantly higher than the expected $48.97 billion, a year-on-year increase of 1.5%, far exceeding the market's original expectation of a 3% decline.

While Apple's revenue reached a record high for the first quarter of the year, the company's service revenue also exceeded $20 billion for the first time in its history.

After the financial report, Apple's stock rose nearly 3% in after-hours trading.

Although it turned in an above-expectation report card like Microsoft, Alphabet-C, Meta, and Amazon, Apple surprised the market in one aspect: unlike other tech giants who talked extensively about artificial intelligence (AI) during their earnings conference calls, Apple asked the market to turn back and ask, "Where is AI?"

It is worth noting that the four tech giants mentioned AI a total of 168 times during this earnings season conference call. However, on Apple's side, CEO Cook only "took the time" to talk briefly about this topic for a few minutes during the hour-long meeting.

In Cook's view, the potential of the AI wave sweeping technology companies is enormous. Specifically for Apple, the company has integrated machine learning and AI into some of its products, such as the "fall detection" feature on some Apple Watches.

But Cook also said that "thoughtful consideration is very important" in the field of AI, and Apple will not comment on its future product roadmap for the time being.

In short, compared to other tech giants, Apple's attitude towards AI technology is relatively restrained: acknowledging its potential, but not talking too much about its specific development.

What was discussed in the conference call without talking about AI?

During the conference call, Apple executives and analysts focused mainly on content strongly related to the financial report data.

Regarding the "biggest contributor" to this above-expectation financial report, Cook said, "Apple's performance did indeed accelerate relative to the quarter that was shut down in December last year, and the production level for the entire quarter met our expectations," so the entire quarter's supply was not a problem.

On the supply chain side, despite facing issues such as the pandemic and chip shortages, the supply chain situation has remained good for the past three years, and the supply chain's elasticity is shocking. In addition, emerging markets such as India, the Philippines, Indonesia, and Mexico have made significant contributions to Apple's sales, especially India, where the business scope continues to expand and growth is very strong, setting a quarterly record.

Cook said he saw "many people in India entering the middle class" and that "India is at a turning point." The average income per user is still very low, and in the long run, there are great opportunities in various fields.

Overall, Apple's development momentum in emerging markets is strong. Although the market share is currently low, it also means good growth opportunities.

At the same time, Cook also mentioned that although China's quarterly revenue in the quarter fell by 3% year-on-year, it actually increased on a fixed exchange rate basis, and the service business also reached a new high. While still able to gain market share, China's buyer indicators are also excellent: about 60% of customers buy Mac and iPad for the first time, and more than three-quarters of customers buy Apple Watch for the first time.

In terms of service revenue, Apple revealed that payment service Apple Pay and Apple's cloud iCloud are both growing steadily. Overall, the model of paid subscriptions around the App Store is also growing strongly. Apple currently has more than 975 million paid subscriptions, almost twice as many as three years ago, and subscription growth is very impressive.