{"id":673354,"date":"2026-11-03T04:40:07","date_gmt":"2026-11-03T04:40:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/673354\/"},"modified":"2026-11-03T04:40:07","modified_gmt":"2026-11-03T04:40:07","slug":"apple-forecasts-slower-services-growth-as-ai-costs-rise","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/673354\/","title":{"rendered":"Apple Forecasts Slower Services Growth as AI Costs Rise"},"content":{"rendered":"

Apple<\/a> expects slower services growth during the holiday quarter, at the same time that it absorbs the cloud-computing costs of Siri AI and prepares to charge customers for expanded access to certain artificial intelligence features.<\/p>\n

Speaking on his first earnings conference call as Apple CEO, John Ternus<\/a> outlined plans for paid access during an analyst question about iCloud+ and Apple Intelligence.<\/p>\n

\u201cThere are going to be some usage limits on features that rely on server-side models, which include Siri AI and intelligent photo editing, some other things like that,\u201d Ternus said, adding that \u201canyone who needs greater capacity will be able to purchase expanded access in the future.\u201d<\/p>\n

Apple did not announce pricing or a launch date. Ternus said iCloud tiers had expanded beyond storage to include additional capabilities, pointing to plans that now bundle Apple TV and Apple Arcade.<\/p>\n

Services revenue increased 10%<\/a> to $31.6 billion in the September quarter. Video, cloud services, payments and advertising reached revenue records, while subscriptions across Apple\u2019s platform exceeded 1.5 billion, growing at a double-digit rate.<\/p>\n

Chief Financial Officer Kevan Parekh<\/a> forecast December-quarter services growth of 8% to 9%, citing sequential pressure primarily from third-party licensing and foreign exchange.<\/p>\n

Apple shares fell about 4% during the call in after-hours trading, after executives outlined the services and margin forecasts on Monday (Nov. 2).<\/p>\n

The App Store\u2019s performance was similar to the previous year, Parekh said during the call, although third-party paid subscriptions grew at a double-digit rate. Management reported more than 1 billion average weekly visitors.<\/p>\n

Parekh cited mobile gaming weakness, changes to the App Store business model in certain countries and the U.S. court ruling affecting transactions through external links. He said gaming weakness would continue into December.<\/p>\n

Payments activity included Apple Pay\u2019s launch in India<\/a> with Axis Bank<\/a>, bringing the service to more than 90 markets. Parekh also cited American Airlines\u2019 deployment of more than 37,000 iPhones to flight attendants for in-flight purchases using Tap to Pay.<\/p>\n

Siri\u2019s Capabilities and Costs<\/p>\n

Analysts asked Ternus how Siri would compete with consumer AI agents and whether those agents could change Apple\u2019s relationship with customers.<\/p>\n

\u201cIt\u2019s primarily request-based today, but as we talked about at WWDC, it\u2019s built on a modern orchestrated-driven architecture that gives us real room to expand its capabilities over time,\u201d Ternus noted to the analysts.<\/p>\n

He said Apple was concentrating on security, privacy and ensuring users understood what information they were allowing agents to access.<\/p>\n

Ternus described the iPhone as a source of personal context for Siri, including contacts, communications, health information and financial data. Apple reported more than 2.5 billion active devices across its installed base.<\/p>\n

Siri AI launched in U.S. English beta<\/a> in September and expanded to French, Japanese, Korean, Portuguese and Spanish in October. Management said requests would run both on devices and through Private Cloud Compute.<\/p>\n

Parekh said Apple was still determining the mix of those requests and the resulting computing requirements. Server inference expenses will be recorded in services cost of sales. Apple will also defer a portion of hardware revenue to reflect Siri AI among the services bundled with devices.<\/p>\n

Management described enterprise uses of on-device AI. Gap is running loss-prevention AI on Mac Mini across hundreds of stores, eliminating cloud token costs, Parekh said. Christie\u2019s is using local models on Mac Studio for productivity work, including pricing estimates.<\/p>\n

Hardware revenue showed different results across categories. iPhone sales increased 17% to $57.6 billion, while Mac revenue rose 24% to $10.8 billion. iPad revenue declined 10%, and Wearables, Home and Accessories fell 8%.<\/p>\n

Greater China revenue increased 21% to $17.5 billion, driven primarily by iPhone and Mac.<\/p>\n

Chief Operating Officer Sabih Khan<\/a> said the foldable iPhone Duo remained supply-constrained. He said advanced-chip manufacturing constraints were easing, while memory availability would restrict Mac and iPad shipments during December.<\/p>\n

Apple raised prices on Mac and iPad in June and on iPhone in September. Ternus said those increases partly offset higher memory costs, alongside existing inventory and lower costs for other components.<\/p>\n

For December, Apple forecast total revenue growth of 7% to 10% and gross margins of 45% to 46%. Management expects higher memory costs to account for most of the sequential margin decline, with additional costs from Siri AI\u2019s rollout. AI investment will continue, Parekh said, as operating expenses grow more slowly than during fiscal 2026.<\/p>\n

For all PYMNTS AI coverage, subscribe to the daily AI\u00a0Newsletter<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Apple expects slower services growth during the holiday quarter, at the same time that it absorbs the cloud-computing…\n","protected":false},"author":2,"featured_media":673355,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,1291,4585,218,219,61,4178,60,10733,80],"class_list":["post-673354","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-ai-infrastructure","tag-apple-intelligence","tag-artificial-intelligence","tag-artificialintelligence","tag-ie","tag-iphone","tag-ireland","tag-siri","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/673354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=673354"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/673354\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/673355"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=673354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=673354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=673354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}