Apple Pushes For Generative AI On iOS 18 To Boost iPhone Sales Amidst Declining Revenue

Apple's market value has also taken a hit, losing its title as the world's most valuable company to Microsoft, with its shares declining by 11.24 per cent this year to a market value of $2.68 trillion.

Apple is reportedly in talks with OpenAI and Google's Alphabet to integrate generative AI features into its iPhones. ( Image Source :Pixabay )

Apple's quarterly report is set to unveil its biggest revenue decline in over a year, as investors are keenly eyeing the tech giant's strategy to incorporate generative AI into its iPhones to reinvigorate sales, particularly in China, reported Reuters. Over the past months, Apple's shares have lagged behind other major tech companies, dropping by more than 10 per cent amidst concerns over its sluggish rollout of AI services and the resurgence of competitors like Huawei in the Chinese market.

Analysts project a significant decline of 10.4 per cent in iPhone sales, which make up about half of Apple's revenue, marking the sharpest drop in over three years. This decline is partly attributed to the exceptionally high iPhone revenue recorded a year ago, as the company met pent-up demand following the COVID-19 pandemic.

However, even after factoring in the catch-up revenue from the previous year, Wall Street anticipates a slight decrease in iPhone sales, contributing to an estimated 5 per cent overall revenue decline for the fiscal second quarter ended in March, the largest drop since December 2022.

Microsoft Pips Apple

Apple's market value has also taken a hit, losing its title as the world's most valuable company to Microsoft, with its shares declining by 11.24 per cent this year to a market value of $2.68 trillion.

To counter these challenges, Apple is reportedly in talks with OpenAI and Google's Alphabet to integrate generative AI features into its iPhones, potentially unveiling them at the upcoming developer conference in June. Analysts believe such features could stimulate demand for the next iPhone series expected to launch in the fall.

While competitors like Microsoft and Alphabet have emphasised their AI strategies in recent months, Apple CEO Tim Cook has been relatively reserved on the topic, making the integration of AI into iPhones a significant development for the company's future competitiveness.

The move comes as Huawei and Samsung Electronics have surpassed Apple in smartphone sales, driven by the demand for AI features in their devices.

Stock Buyback On The Cards

In addition to AI integration, Apple's quarterly report will also shed light on its stock buyback plan and the performance of its latest product, the Vision Pro headset, released in February. Despite initial enthusiasm, there are indications of slowing demand for the $3,500 device, prompting Apple to adjust its production estimates.

Furthermore, soft demand is expected across Apple's hardware business, with declines projected for iPad and Mac sales by 11.4 per cent and 4.3 per cent respectively in the March quarter. To address this, Apple is gearing up to unveil a revamped iPad lineup and update every Mac model with faster, AI-focused M4 processors.

Despite these challenges, the services business, including the App Store and subscription services like Apple TV, is anticipated to remain a bright spot with a forecasted revenue growth of 7.7 per cent.

Apple's quarterly report, due on Thursday, will provide crucial insights into the company's efforts to navigate through the current market landscape and reignite growth amidst declining revenues.