Bloomberg Bonus Episode: Apple and Intel Earnings
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Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio.

We want to get to some earnings because we're seeing some stocks move here in the aftermarket. Intel shares, they are right now up about 2%. This is as we got in terms of some of the big headlines from Intel. See, first quarter adjusted gross margin of 36%. That's below what the street was forecasting of about 39.3%. Go back to the fourth quarter, the last quarter. Revenues, that was a beat, $14.26 billion versus an estimate of $14.6 billion.

13.81 billion and again talking about first quarter revenue some forecasts here a bit of a range 11.7 billion to 12.7 billion and that tim compares with the street estimate of 12.85 billion but again right now we're seeing intel up about two percent i know they also talked about in terms of some spending right and i think

basically saying they will not be spending speculatively. So I feel like some of that plays to maybe some of the commentary we've had about the AI spend, maybe a rethink this past week. A reminder too, they're also looking for a new CEO at this point to take over for Pat Gelsinger, who left at the end of last year. For more, let's go to Jackie Davalos. She's in our San Francisco bureau. She's been following this company and these numbers closely. Jackie, how is the turnaround going?

Well, that's the question everyone wants to know. The key uncertainty here is who's taking over the company. You had some guidance from the CFO as to how the next quarter is going to look like, but not so much guidance on who's going to be taking the reins. And I think that's the

big point of uncertainty. And if you look at shares, it's kind of a tepid response considering how much uncertainty is swirling around the company right now. But to your point, Carol, I think some of that optimism is coming in through the comments around spend. As you know, the former CEO, Pat Gelsinger, was ousted just last month and

big part of the reason for that was this inordinate amount of spending that the board perceived to be a drag on the company's performance. Now, we might not know who might be taking over, but what we do know is that next quarter they're looking at revenue of about $11.7 to $12.7 billion. That's below estimates, but perhaps some of that optimism from the fact that they beat pretty well on their revenue figures for the fourth quarter is coming through. Yeah,

Yeah, it's interesting just looking through to some of the reporting from our own Ian King, of course, who follows the chip sector and saying that, you know, again, what you guys were just talking about, investors and analysts waiting for the appointment of a new leader who will determine Intel's future. I mean, it's a big question. The company's outsourced manufacturing push will not see meaningful revenue from Silicon customers until 2027. For now, the bulk of outside sales will come.

from packing work. So we're getting a little bit more in terms of the business here, Tim. But again, the stock, as Jackie mentioned, just pulling it up again here in the aftermarket and the stock right now, just up about 1.2% here, but it's not selling off, which is interesting. I mean, there's been a lot of selling off over the last few years with Intel to

when you zoom out, of course. Jackie, the data center business certainly facing competition from NVIDIA and AMD. Their core business, PC processors. How is demand there? How's competition there?

Well, we got some comments from the CFO who said that competitive dynamics is a big reason why we're seeing a bit of a weaker forecast. He also cited the macro uncertainties and of course seasonal weakness. But when we go back to those competitive dynamics, who is the competition? And Tim, you're absolutely right. Those AI

accelerators are the big question for investors. Can they get in here and compete? Obviously with the gold standard coming from Nvidia, it's going to take a lot of work and investment to really chip away there. But in the meantime, they're also facing competition from their bread and butter in that processing, personal computer processing unit. You have AMD really coming in. And then of course on the outsourcing manufacturing site, Taiwan Semiconductors is also a pretty big player now. So they're kind of

facing this competition from all ends, even as we look at AI being this big opportunity for pretty much every tech player out there. Intel has really been struggling to make a name for themselves in the space. Just to rehash, Intel shares, folks, in the aftermarket up about 1.3%, going to the first quarter forecasting revenue of $11.7 billion to $12.7 billion. The estimate on the street is $12.85 billion or so above that.

Also, in terms of forecast, he's an adjusted EPS of just flat. Estimate is for $0.08. He's adjusted gross margin of 36%. That's a miss, too. Estimate is 39.3%. Go back to the fourth quarter and their current quarter sales and profit forecast falling short of analyst projections. But if we go back to the fourth quarter, $14.26 billion. That's the revenue. That's down 7.4% year over year. The estimate on the street was $13.8 billion.

But again, the key thing as we're talking about, you know, not yet having any update on a permanent CEO. The interim co-CEO, David Zisner, saying our first quarter one outlook, I should say, reflects seasonal weakness magnified by macro uncertainties, further inventory digestion, and competitive dynamics. Jackie, sounds like a super full plate. We know it's been a full plate for Intel, but it still is. It's a reminder, at least, that it still is.

100%. And as we look to the conference call with analysts, the big question is going to be not just an update for leadership, but also in this interim, what's the game plan here? Because now that you're seeing kind of spend really being scrutinized after the deep seek drama earlier this week, it's sort of affecting those who might have been preoccupied.

perhaps exempt from that kind of scrutiny before these open, you know, AI, other AI developer kind of players out there. And so obviously this is no, nothing new for Intel, but of course I think that might be, um, you know, some of the guidance that they want this, this conservative spend. Um, what does that mean? How does that look like in practice at a time when it is going to take investment to really kind of break into this AI space?

Another thing that we'll be looking out for in the conference call is just any more guidance around what the company plans to do to perhaps offset some of the weaknesses in its bread and butter business and its personal computers.

What does it plan to do about this kind of new competition coming from Taiwan semiconductors? I think that's what I'm going to be looking out for in the upcoming call. I think what still surprises me, Jackie, is this is a company that has no full-time CEO. And you had Pat Gelsinger out earlier this week. We talked about this with Ian King, tweeting that he was buying shares of NVIDIA.

during the decline of Nvidia on Monday. He wrote about that on LinkedIn and it was surprising to see that. I'm not here to talk about Gelsinger. What I am wondering from you about is what are analysts saying about the type of leader who could come in and turn this company around? Like, who are the names? Do we have names that are being thrown around at this point? Do we have a timeline? What do we know?

I don't think there's too much that we do know other than the big point of scrutiny has been spend. And if you're going to bring in a leader that can kind of articulate a new vision for the company, still kind of bring it something that's forward looking that is not going to be

predicated on a plan that is going to take, you know, five to 10 years to pan out. Because I think what investors want to see is what can we do with what we have now? And, you know, obviously Pat Gelsinger didn't get to live out his full five year plan. But, you know, he did put in in place a

solid foundation that I think a new CEO can work with. So some of the notes that we've been seeing from the street include, you know, what can be done with what foundation currently exists, because it's not nothing. You know, some solid investments have been made.

some good inroads have been made. But I think it's just a matter of kind of that conservative spin and how far can that take them. Hey, all right, Jackie, thank you so much. Jackie DeVallos, Bloomberg News tech reporter, joining us with the latest on Intel. Keeping a watch on it as it moves up just a little bit in the aftermarket. Do want to mention KLA Corp, semiconductor manufacturing equipment company.

up about four and a half percent in the aftermarket following its earnings. Looking at what the company has to say, second quarter adjusted gross margin 61.7 percent, slightly better than the street expected. Third quarter adjusted gross margin, so looking towards the current quarter, 61 to 63 percent. Also talking about third quarter revenue, they're looking for 2.85 to 3.15 million, billion, excuse me, and that is better than the street expected.

That explains why you're seeing this stock up. Do not go anywhere. Apple to come in just a moment.

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The earnings continue to come out. We are awaiting Apple, which is set to report in just about seven minutes at the bottom of the hour, 4:30 p.m. Wall Street time. So as soon as they cross, we will bring them to you. A reminder, the company will report for the quarter despite some headwinds stemming from China, the slow rollout of in-house AI features. So there's a lot coming at us when it comes to Apple in particular.

A lot coming at us when it comes to the whole tech sector this week. Angela Zeno is Senior Equity Analyst over at CFRA. He joins us from New York City. Angela, I do want to start with Intel because they just came out, certainly a big part of the semi-sector, but they're also going through, of course, some changes, waiting for a new CEO, a new leader, a new way forward. Initial thoughts on Intel?

Yeah, no, thanks for having me. So, you know, you kind of look at the results overall and I would say they were okay. I mean, as far as the results were concerned, I think earnings about 13 cents, sales were down 7%, roughly kind of in line where we were expecting. I think as far as the guidance is concerned, it was definitely on the lighter side of things.

but yet nothing abysmal nothing like we've seen in past orders where they've kind of missed by a much wider margin so as far as part of the results of our concern i think it was perfectly fine at the end of the thing kind of uh... you know segments wise i think that the client computing group which is kind of more than their pc business was down about nine percent and we kind of look at their data center business down about three percent again i mean

It was kind of where we had expected largely. So, yeah, I mean, I think it's one of those situations where this company is kind of just kind of going through the motions and we're just kind of waiting to see kind of who that next CEO is going to be and what they have to say on the call as far as kind of cost cutting is concerned here in the intermediate term. I could have asked you the same question that I'm going to ask you, Angelo, any time over the last three years. Where is Intel in its turnaround?

You know, it's a tough one because they continue to have to kind of restart in terms of, you know, where they're at. I mean, and it's typically because of the fact that they haven't really kind of given, you know, the existing leadership team, you know, enough time to kind of, you know,

their vision to really come to fruition. I think right now what we're looking at is you need a new CEO. I think when you kind of look at their core business, it's really kind of under attack, right? On the PC side of things, you hear things like Arm looking to take half the market on that side of things. You got kind of greater competitive pressures going on there. You kind of look

on the data center side of things. They don't have the right offerings there. I mean, CPUs are kind of a thing of the past at this point in time. And you've got, you know, these hyperscalers out there kind of rolling out their own CPU offerings. So it is a very difficult time for Intel at this point in time. There's really kind of no direction. You need that direction. So the faster you get a CEO, the better. Again, this is kind of almost a race to the bottom, it seems like.

Right now, in terms of kind of continuing to cost as their revenue trajectory continues to go down. I think really kind of if I'm looking at this company, it's all about how they can execute on the foundry side of things right now. If you're thinking about a turnaround going into the second half of the year, I mean, you've got 18A that's kind of been long awaited and hyped up.

um panther lake it's supposed to ramp here in the second half of the year we want to see kind of what kind of customers like you know start ramping on that side of things clearly you're not going to have a major hyperscaler out there all of a sudden just give business to intel they need to kind of execute on that side of things so that's where we're at right now i think they need to start show some sort of promise on the foundry side of things and hopefully they can kind of gain some momentum from there

I got to tell you, I get these emails on the terminal when stories are read at like a high rate, those read spikes. People want to know about Apple. It says that our live blog on Apple, Carol, is already hitting a read spike before those numbers come out. We're expecting those numbers in just about two minutes. Angelo, China, is that the biggest concern? We saw some downgrades the early part of this year.

Yeah, I mean, it seems like, you know, when you kind of look here over the last couple of years, January just hasn't been a good month for Apple. And, you know, you can kind of say maybe a part of that is seasonality and what have you. I think obviously the other issue is you kind of look over the last two to three years, the competitive pressures have definitely escalated out in China. I mean, Huawei has become, you know, a real threat again at the high end of the market.

And we kind of want to know what's going on with China. It's somewhat of a black box at this point in time. And you kind of look at some of the sell-through numbers that have been posted specifically by the Chinese government here late in the year. The numbers don't look good. And I think most people realize that most investors are kind of going into these numbers knowing that China or expecting that China is not going to be good.

The question is, how bad is it? You know, we are going to have to deal with some sort of excess inventory situation where they're going to start discounting more than we expect. And it's going to look like an ugly March quarter in terms of the guidance. I think that's at this point what we're looking at. But in terms of the biggest risk kind of going into the print here and as far as the March quarter is concerned, it's absolutely China. And we also know as far as the March quarter guidance is concerned,

It's going to be somewhat on the weaker side of things because of the Forex uncertainties. Angela, we're just about 40 seconds away from those Apple earnings. Stock's down about 5%. We know it's been lagging some of its tech brethren, if you will. Question is kind of what's next for Apple? What could they say today that might give some indication of what's next? They've started to give some clues. Just got about 20 seconds here.

I think the hope is that you get a better than fear type number really on China. I think that's kind of the big thing. And then of course, on the services side of things, you want to make sure that that's running on all cylinders. We're going to, we're going to continue to hopefully continue to get double digit growth. And I think if you can kind of get, you know, those two kinds of things running, um,

think that should be enough as far as kind of where the stock is at and the pullback that we've seen all right folks we're talking with angelo zeno senior equity analyst over at cfr research he's going to stay with us as we get ready for those apple earnings and they are crossing so let's go through some of the numbers first quarter revenue 124.3 billion that is

just a hair better than what the street was expecting. $124.1 billion is what the street was looking for. Products revenue, $97.96 billion. That's up about 1.6% year over year. Tim, that's a little bit light. $98.02 billion. You break it down, iPhone, the all-important iPhone number.

69.14 billion. That is down year over year. Estimate was for 71.04 billion. And then you keep going down. China revenue, big miss there. Estimates for $21.6 billion. That came in at $18.51 billion. Wearables, home and accessories coming in just shy of estimates. Mac revenue coming in above estimates. iPad revenue coming in above estimates. First quarter products revenue coming in shy of estimates.

But Carol, what we're talking about right now, iPhone revenue coming in light, 69.14 billion versus estimates of 71 billion. And that China number significantly lower than analysts wanted to see coming in at 18.51 billion. Apple also maintaining its cash dividend of 25 cents a share. I should say the stock has been bouncing around in the aftermarket. We've seen it up about 1% right now. It's just up about six tenths of a percent, up half a percent. Angelo Zeno, come on in.

initial thoughts on the first headlines off of this earnings release? Yeah, I mean, I think this is kind of a situation where execution was, I think, as good as you could have asked for. I mean, as far as the top line is concerned, roughly in line, I think the expectation, again, was about $124 billion. So you're looking at what was it, maybe 3.8% or close to 4% growth, let's call it,

as far as kind of a year-over-year growth rate. And I mean, I think Tim kind of highlighted the iPhone numbers were definitely a disappointment and the China numbers. So it's definitely a China iPhone problem as far as the quarter is concerned and why we missed. And again, the expectations going into the quarter was it was going to be a challenge. And the fact that they had been able to kind of navigate and still meet the numbers despite those issues was,

I think kind of helps maybe de-risk the stock, at least when you kind of look at the numbers this quarter. I mean, we'll see what the March quarter guidance is going to look like. But my guess is you're going to continue to see the further weakness on the China iPhone side of things. Angelo, how much of the iPhone miss can you attribute to China? Is the iPhone miss just a result of China?

It seems like it, to be honest with you, just kind of given just given the high level numbers that I'm hearing from you. It just seems like the weakness is really kind of, you know, all China. And, you know, my guess is that, you know, Western markets probably held up much better or held up as as to be expected. And, you know, we kind of saw that.

You know some pronounced weakness on the China side of things and again not a surprise because a lot of the sell-through numbers that had you know come out from China, you know was looking at Essentially was kind of pointing towards double-digit the clients out of kind of the iPhone business. So that's essentially what you got so it's it's pretty brutal but

Not necessarily a complete surprise given some of the indications we got going into the numbers. All right, the three bright spots, iPad, Mac, and services. The iPad and Mac beat year over year. Services is at an all-time record. What's interesting too, all-time revenue record too as well, $124.3 billion and narrowly beating Wall Street estimates.

Again, a huge miss for China when it comes to Apple, $18.5 billion versus $21.6 billion that Wall Street expected, and a big miss for the iPhone, $69.1 billion versus $71 billion expected. And, you know, initial reaction, Angelo, in terms of the share price, initially we saw a pop, and then we saw the stock move down just down a hair at this point.

A lot of when we talk about Apple is we are saying what's the next big thing, right? And certainly if the iPhone is certainly a maturing business, still a very big business, but maybe some questions about China growth going forward. But where do you want to see the company move into? Where are the new opportunities in your view for Apple?

Yeah, I mean, listen, I think we need to continue to see good growth on the services side of things and then to continue to innovate and come out with new offerings on the services side of things. And I think just that business will naturally continue to grow due to a number of factors. But as far as kind of what we're looking for here over the next couple of quarters, I don't think you should forget about Apple intelligence. I think that's still a very important part of the story. We've kind of seen the first two tranches.

of Apple intelligence really roll out. The first tranche was really a non-event. I actually think, and I have the iPhone 16, I actually really liked a number of the other upgrades on the second tranche out there. I mean, I use kind of visual intelligence all the time. Not crazy about Genmojis and what have you, but...

I think there were a number of decent features out there, specifically on the visual intelligence side of things. I think Playground was great. I think the ChatGPT integration is super helpful for someone that's just kind of looking to do stuff on the fly on their phone. So I just don't think the consumer is well aware of it, obviously, and we're still at a point where most of the installed base doesn't have access or even knows about Apple.

apple intelligence at this point in time we'll get kind of the the third you know tranche here in the coming months and i think that's really going to help in terms of that assyria integration and what apple can kind of demo demonstrate across kind of the app store and what have you and then you know clearly you know we kind of want to see how that reflects um across the rest of the ecosystem as they kind of

throw this out internationally, what kind of partnerships they can kind of announce out in China? Does that make a difference in China in terms of kind of helping the demand outlook? Because I do think a big problem with Apple right now in China is the fact that they don't have AI capabilities where, you know, obviously their China peers do. They don't have a foldable device out

there where their peers do. And hopefully, you know, we see something on the foldable side of things here over the next kind of two years. So, you know, where I'd like to see them go is kind of, you know, start evolving their ecosystem where they could find some success, at least in China, because at this point in time, you know, what they've got in terms of their offering in China is just not going to cut it. All right. Going to leave it on that note. Angela's, you know, he's senior equity analyst at CFR Research joining us in New York City. Do you want to mention,

Tim Cook, in the earnings release and the statement, called it the company's best quarter ever at Apple. He also said, "Through the power of Apple Silicon, we're unlocking new possibilities for our users with Apple Intelligence, which makes apps and experiences even better and more personal. We're excited that Apple Intelligence will be available in even more languages this April." So, Tim, certainly choosing to highlight that. We should point out Apple shares, though, after an initial pop right after the earnings release,

here in the aftermarket are now pretty much flat. Yeah, no mention of China in that statement, which certainly will be a focus of investors on that call when it does begin in just a few minutes. It's certainly a focus for Caroline Hyde. She's a Bloomberg Technology co-host. She joins us here in the Bloomberg Interactive Brokers studio.

Two big misses today, Caroline. iPhone revenue coming in about $2 billion shy of estimates and then greater China revenue coming in about $3 billion shy of estimates. Does Apple need to change its strategy in China or do investors need to adjust their expectations about China? Do we need to get more comfortable with their selling fewer phones but a higher average selling price?

And I think that's perhaps where they're trying to educate people towards. Is that in China or is that everywhere? Well, I mean, it feels like everywhere, but we do still have the slightly cheaper phones that are available in the US. But we don't have the rampant sort of competition that you do have with a Huawei and with some of the local operators that are in China that are just managing to produce far more sophisticated phones at a much lower price point. And

Also, there's some national patriotic fervor that's going on and wanting to buy your locally made phones. So they have been educating us, and I think Counterpoint Research, for example, front-run the fact that they're going to have had a dismal general amount sold, 18% reduction, they thought, in terms of phones sold. But if the average selling price is picking up,

you're not going to be hurting quite so bad. But look, ultimately, we've seen it's a big miss. They're growing in every region outside of China. Even in the Americas, Japan was pretty good. But really, China has been that real weak point. And we have to perhaps see that the company is just going to try and retrain us to think about them as a services company, as an Apple intelligence company. And look, with iPhones missing as well, maybe we have to start to think, is this really always going to be the juggernaut we thought it was?

What about Apple intelligence, right? We have certainly heard so much from the company, Tim Cook singling it out also on the release and in a statement.

How is the world thinking about Apple intelligence and its opportunities? I mean, wah, wah, that's far. I mean, of course I want to have a fun Genmoji, but ultimately am I going to be upgrading my phone for that? No, I'm probably going to upgrade it to an iPhone 16 because my darn camera is broken and I want to get a better camera and I want to get a slimmer phone, but I wouldn't have gone for it for Apple intelligence, largely because, look, I can integrate Google and upgrade there and have it better.

magicing my emails and making life a little bit more sophisticated there. And compared to Samsung, it is not able to innovate in the way that Samsung's adapted to Alphabet's offering. OpenAI, though, I think the winning formula for Apple intelligence going forward is that it hasn't spent billions on its own large language model. It's gone in bed with OpenAI, and OpenAI is probably going to have to get a lot cheaper because of what's happening with DeepSeek. Caroline H., have you been watching Severance? No.

Okay, well... I'm too busy on the Jacket Call, the Day of the Jackal. It's a huge investment by Apple, huge marketing push, services revenue, a bright spot for the company. Yes. Coming in at $26.34 billion, estimates for $26.1 billion. I bring up severance because that's part of the services category. TV, yeah.

This is a high-margin business for Apple, the services category. I'm not sure TV is. Not sure TV is, but the services category. Does services growth and strength ever offset weakness in China or from iPhone? Well, I think it's interesting that the new CFO, who has just taken on the role, he's a long-time Apple executive, but he's just taken on the role in January, is really talking up about sort of the installed base. Because that's where they want you to think. The amount of...

Macs, iPads, phones that we all own, they say that we now have an installed base of active devices that reached an all-time high across all products and geographic segments. Suddenly the services spigot wheel just flies. And then when you're getting into payments, when you're getting into interoperability, of course services just becomes ever more necessary for you.

I mean, I probably pay Apple more each year between, you know. Cloud. Memory, cloud. Yeah, cloud. But what about the App Store? I do wonder, with some regulatory perspective. Good point. We heard it from Microsoft yesterday. Well, was it Meta yesterday, singling out EU? But how much are they going to have to change the business model when it comes to the revenue they can just skim away from an App Store when it think about how it's treating its own consumers and whether we're being fairly treated across the board? I mean,

And what do you want to know and what do you want to hear from them on the call? Is it just China or is it other things?

I think what is your next big innovation? Is it about the home? Because look, the Vision Pro looks cute, but are we all spending thousands on it? No, it hasn't been the R&D winner for them thus yet. But it might have spin-offs when they can tell about how much they've iterated there to bring it to what they're going to do with the home. The video screens, the robotics we're going to see, how they can become ever more integral. We need another winning product. It wasn't cars, the Vision Pro not yet.

But what about 2025 with some new unleashed hardware? I'm amazed they're not more entrenched in the home. I mean, I know in my home, it's such an Apple household, but it's not. But we're a Google home household too. We are too. We are too. And so I'm kind of amazed that they have kind of waited so long to get into the home market.

MARK BLYTH: Yeah, it would be-- certainly, that would be an interesting product category from them. What about something more akin to Meta's glasses that we spoke about yesterday? And if they were to come out with something that is less Vision Pro, Oculus, and more sort of like low profile Ray-Ban. CARRIE NORDLUND: Because that was the irritation for many, was it? The fact that you've basically got a huge battery connected to you, and it's just so hard to move around. MARK BLYTH: You're like wearing a helmet.

The tried and tested formula of Apple is let everyone else play and then you come in and win the day with something beautiful, sleek, and everyone jumps on board. So maybe that is the winning formula for the home and when it will be for glasses and they'll start to dabble in. I mean, Tim Cook's got a nice pair of glasses. I wonder if he wants to start making them. And we suit you down to the ground, Tim. But I do think that they're always going to be slightly slower off the mark but then come and bring in what it... They haven't got a foldable phone yet. Look, Samsung has...

on the market. Everyone's been wanting to get a smaller form factor, but they're just waiting until they can perfect

So you don't get a crease in it. So I do wonder whether it's just going to take a little bit of time. You know, we have talked with market guests about just how the overall market here in the United States is so overweighted to some of these big tech companies. And I am curious, though, they are important, right? When you look at kind of the numbers that they bring in. 124 billion. I mean, it's just like, even when we say, right, maybe, right, it's extraordinary. So how are you thinking about this week of some of these big tech names and the results that we've had?

done all right considering Monday and the deep-seekly whiplash that we had and I thought the spend would be so much more under consideration but I think Satya even though Microsoft saw a big hit today Satya managed to sort of thread the needle that look we're already offering R1 on our foundry AI foundry come to us find the best models we'll also be able to we have our issue is supply we've got to continue to invest so they managed to vindicate the spending I think Meta did a

It's a phenomenal job at just talking up with such pompous, grandiose ideas that won everyone over. Elon Musk did the same. The fact that actually the numbers look pretty ugly, but he's so optimistic about Optimus, he's so optimistic about FSD, that we managed to be blindsided by the idea that actually the plans are there, the money is being well spent, and we're still committed to these companies. So ultimately, I think they've managed to navigate a pretty rocky period. Apple, the fact that it's flat,

Microsoft's been really the only real pain point here. STMicro had another problem over in Europe as well. I look towards Alphabet and Amazon. Can they vindicate the amounts of money that they're going to have to spend? I'm not going to put words in Mark Gurman's mouth, but he spent plenty of time over the last few months on our program really criticizing Apple for its AI.

And it's analysts. He loves to criticize the analysts on it too. The foray into AI. And, you know, a question about slow rolling AI and to what extent this actually is something that's not just incremental but is actually meaningful. When do we start to see Apple intelligence really flourish? I think they're signaling it, signaling in even the press release saying that more languages are coming in April.

we will be making it further integrated. It's also interesting when they bring these things without us even knowing, like the news that they brought Starlink and the fact that we can now use with it, they just hide in these little operating system upgrades something quite exciting. So has Apple publicly acknowledged that? I know Mark Gurman reported that it was going to happen. I think T-Mobile CEO came on and talked about it. And it's just that ultimately they do slow roll. They don't perhaps,

They realize that they need to speak to the investor base about intelligence. They're going to talk about how they're really managing to infuse it in a more seamless manner. But to you and I as a consumer, I think they just don't want to stress test it too much. They want to slowly have us naturally absorbing it and making our life simpler and simpler. But thus far, like a little summary of my email hasn't changed my life all that.

Yeah, exactly. I just want to remind everybody that we do see Apple shares fluctuating in the aftermarket. Apple, as our Mark Gurman reports, posted sales that were slightly better than analysts estimated, even as the iPhone and sales in China were weaker than anticipated. Caroline, just talking about that revenue number, it did rise 4% to $124.3 billion in the fiscal first quarter last

Analysts had estimated 124.1, so coming in just a hair better than what the street was forecasting. But again, concerns over China and Apple struggling there. Stock's up about four-tenths of a percent here in the aftermarket. Yeah, I just think it's interesting to see, after what a crazy week that we've seen, I feel like, with technology, that the stock is just kind of flat.

Yeah, we priced it in. And remember, it was kind of beaten up running into this. We'd had five analyst downgrades in the last month or so. And unlike an NVIDIA that has zero sales, there have been a few creeping into Apple. So I think people had started to price in the China weakness. Interestingly, you made the point, Tim, like,

are they gonna sell us cheaper price points? They are, according to Mark Gurman, gonna be focusing on the iPhone SE, which is the cheaper, around $500 offering. That's gonna come in April, March maybe. That's gonna pull more people perhaps away from the Samsungs and the Android offerings. Maybe we get the cheaper lower end AirPods making a dent.

But all of this, I think, had just been guided. We knew that Apple was going to have a terrible time in China and Apple Intelligences isn't there yet. And people have really been complaining about the latest OS use cases, the way in which the phone just doesn't feel as slick as it used to. Are we going to start hearing more chatter about...

Tim Cook and his succession plan. We've been talking a lot about Intel and what Intel does post-Gelsinger. I mean, they've got some big issues, huh? They do. Tim Cook has been at Apple since 1998. He's been CEO since 2011. What's the succession plan? And they've just had a CFO come into the midst who's been trained up from within. I don't think that anyone feels that Tim's going anywhere soon. He navigated the first Trump administration so swiftly and seamlessly, worked well to be able to protect his business that if

course is so dependent on China not just from a selling perspective but it's more from a production perspective what do tariffs mean for him so I think in this next administration can't I wouldn't ever bet that he's gonna hand over the baton anytime soon but I think that is a key question that people are gonna be asking who from within has been groomed up because remember they lost a lot of talent as well Johnny Ives left and a lot of people seem to move from the engineering the product development side of things

All right. Fascinating stuff. Caroline, thank you. Thank you. Again, second day, like making sense of all the big tech earnings. As we said, Caroline Hyde is co-host of Bloomberg Technology on Bloomberg TV. Catch it. They'll continue coverage of all the earnings this week. That'll be at 11 a.m. Wall Street time tomorrow on Bloomberg TV. Right now, Tim, Apple shares just down about one quarter of 1%.

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