Guys, I don’t think Tim Cook knows how to monetize AI

Apple sailed past expectations when it reported quarterly earnings on Thursday, posting $143.8 billion in revenue — a 16% year-over-year increase. As analysts lobbed mostly gentle questions at Tim Cook during Apple’s earnings call, one analyst finally asked the question that much of Silicon Valley seems determined to avoid.

“When I think about your AI initiatives, it’s clear there are added costs associated with that,” said Morgan Stanley analyst Erik Woodring. “Many of your competitors have already integrated AI into their devices, and it’s just not clear yet what incremental monetization they’re seeing because of AI…”

There may have been a flicker of anxiety beneath the polished finance-speak. In what can only be described as a rare act of investor bravery, Woodring went straight for the question lurking in the dampest corners of Wall Street’s collective mind.

“So, how do you monetize AI?” he asked.

You might expect this question to come up more often. It doesn’t. Instead, much of Big Tech appears to be operating on vibes alone when it comes to AI strategy. Take OpenAI, which seems unstoppable given how ChatGPT has embedded itself into everyday culture. And yet, the company isn’t expected to turn a profit until at least 2030. Analysts at HSBC have cast doubt on even that timeline, especially given estimates that OpenAI will need another $207 billion in funding. Ask around the tech industry how OpenAI plans to break even, and you’re likely to get the conversational equivalent of a ¯\(ツ)/¯.

So perhaps Cook — buoyed by a perfect earnings day — would finally explain how Apple, or anyone else, plans to make AI pay for itself.

The answer did not inspire confidence.

“Well, let me just say that we’re bringing intelligence to more of what people love, and we’re integrating it across the operating system in a personal and private way,” Cook said. “And I think that by doing so, it creates great value, and that opens up a range of opportunities across our products and services.”

And there it is. Apple will monetize AI by creating “great value.” That value will, crucially, “open up a range of opportunities.” Those opportunities will arrive via “products and services.”

Crystal clear.

Still, credit where it’s due: someone finally asked the question—shout-out to that Morgan Stanley analyst for giving it a shot.