#Apple

Wall Street declined Thursday amid concerns over AI stock valuations and a surge in corporate layoffs. Apple is reportedly in talks with Google to integrate Google’s AI into Siri, potentially costing Apple $1 billion annually. Despite solid sales, Costco shares dipped, with analysts scrutinizing its premium valuation. Disney replaced Penn Entertainment with DraftKings as ESPN’s official sportsbook partner, aiming to enhance its DTC business and boost engagement within the ESPN ecosystem.

Apple is reportedly integrating a customized version of Google’s Gemini into Siri, a move that could cost Apple $1 billion annually. This upgrade aims to enhance Siri’s summarization and planning capabilities by leveraging Gemini’s 1.2 trillion parameter model. A hybrid approach is planned, with Apple’s Private Cloud Compute ensuring data privacy. The collaboration reflects Apple’s strategy to bridge AI capability gaps and stay competitive, while intending to develop its own technology long-term. The updated Siri, codenamed “Linwood,” is expected in iOS 26.4.

Apple (AAPL) reported strong fiscal Q4 2025 earnings, exceeding expectations with EPS of $1.85 and revenue of $102.47 billion. While iPhone revenue slightly missed estimates, Mac and Services revenue beat expectations, driving overall growth. CEO Tim Cook anticipates a minimum 10% revenue increase for the December quarter, fueled by strong iPhone 17 demand. The company reported $416 billion in total revenue for fiscal year 2025, a 6% increase year-over-year. Supply chain constraints and tariffs impacted specific product lines, but Apple absorbed the tariff costs.

While tech giants aggressively invest in AI data centers, Apple employs a “hybrid” strategy, blending internal infrastructure (“Private Cloud Compute”) with third-party resources. CFO Kevan Parekh highlights this balanced approach, prioritizing scalability and data privacy. Though Apple’s capital expenditure is increasing (projected $14.3 billion this year), it’s comparatively restrained. Apple Intelligence, utilizing proprietary chips, influences purchasing decisions. Operating expenses, driven by R&D, also reflect AI investments. Apple remains optimistic about future AI impacts, projecting sales growth despite concerns surrounding its unique AI strategy.

Apple’s fiscal Q4 revenue surged 8% to $102.47B, exceeding estimates, with EPS at $1.85. Strong performance and rosy holiday quarter forecast boosted shares. Services achieved record revenue across all regions. iPhone sales grew 6%, limited by supply constraints. Q1 guidance projects significant revenue growth, driven by iPhone 17 demand. Management expects robust services growth. Apple ended the quarter with $132 billion in cash, returning $24 billion to shareholders. Price target raised to $300.

Apple briefly surpassed a $4 trillion market cap, driven by iPhone 17 demand, favorable antitrust rulings securing its Google search deal, and strategic domestic manufacturing investments. Analysts at Bank of America and JPMorgan express optimism, projecting earnings growth and raising price targets based on future AI prospects. While AI rollout delays raise concerns, strong iPhone sales and tariff management contribute to a positive outlook. Upcoming earnings are crucial to validate the iPhone upgrade cycle and demonstrate sustained growth amid competition.

Apple’s upcoming earnings report is expected to highlight initial iPhone 17 sales, with analysts anticipating a potential “super-cycle” driven by strong demand for the iPhone 17 and 17 Pro. However, the iPhone Air is reportedly underperforming, prompting order adjustments. Analysts suggest this may not significantly impact Apple’s overall trajectory, particularly if flagship models maintain robust sales. The Air’s design could inform future innovations like foldable iPhones, reflecting Apple’s long-term strategy of experimenting with new form factors and technologies.

Apple and Microsoft shares briefly surpassed the $4 trillion market capitalization on Tuesday. While Apple closed slightly below, Microsoft maintained the threshold, driven by its increased stake in OpenAI. Apple’s surge, a company first, coincides with strong iPhone 17 sales. Investors are optimistic, with Apple shares up 25% and Microsoft up 6% over three months. Both companies are scheduled to release earnings reports this week. Apple has also diversified its supply chain, mitigating trade policy risks.

OpenAI and major hyperscalers like Microsoft, Alphabet, Meta, and Amazon are significantly increasing capital expenditures to build AI infrastructure. This investment race, driven by the demands of generative AI, focuses on supercomputing data centers and Nvidia AI chips. Analysts project substantial capex growth, with total hyperscaler spending potentially reaching $550 billion next year. While these companies aim for AI dominance, they must balance investments with revenue growth and market expectations. Even Apple plans to increase AI spending, signaling a strategic shift.

Apple has begun shipping AI-focused servers manufactured at its Houston, Texas facility, marking a significant step in its $600 billion U.S. investment. These servers, powered by Apple’s silicon, will support Apple Intelligence and Private Cloud Compute services. The move aims to bolster domestic production, create jobs, and enable closer hardware-software integration for accelerated AI innovation. This initiative reflects a strategic shift towards controlling its supply chain and responding to the increasing demands of AI workloads.