Tim Cook, Apple, and AI: An Analysis (Premium)

We live in interesting times, thanks to AI, and Apple is increasingly finding itself trailing rather than leading. Every few weeks, it seems, we're treated to reports from Mark Gurman and others that describe the internal angst that AI is triggering at Apple, and about yet another plan it has to catch up.

But this past week has been particularly interesting. Apple delivered another blockbuster quarterly report with better-than-expected iPhone sales and a surprise iPhone milestone. Analysts grilled Apple about what it was doing to catch up to its Big Tech peers in AI, and Apple made some surprising concessions. And then CEO Tim Cook held a rare all-hands meeting with employees specifically to discuss AI and how important it is to company.

Here's what's happening
? Apple Intelligence: Some highs, some lows
Apple announced its first big AI push, Apple Intelligence, at WWDC in June 2024 but it then failed to deliver any of the new features in the first wave of new OS updates that arrived that September. The first Apple Intelligence features finally came to Apple's devices in late October, and then the company slowly rolled out additional functionality via minor updates in December, January, and April.

Controversially, Apple never released the promised AI-powered "conversational" Siri update and it eventually revealed that it wouldn't be able to do so until at least 2026. Apple was sued for false advertising with Apple Intelligence, and the company later removed the "available now" text from the Apple Intelligence page on its website.

A year after the initial Apple Intelligence announcement, Apple announced its '26 OS updates at WWDC 2025. And though the primary focus was on the controversial Liquid Glass user interface that Apple will use across all its major OS platforms, the company didn't shy away from discussing new Apple Intelligence features or the Siri debacle, as was expected. As I write this, Apple's '26 OS updates are available as public betas, and it plans to release each on schedule this September. But all eyes are on the future and whether, or when, Apple will update Siri and perhaps finally show some leadership in AI.
? Apple earnings
On Wednesday, Apple delivered a quarterly earnings report that was somehow both exceptional and troubling. The company reported a net income of $23.4 billion on record revenues of $94 billion in the quarter ending June 28, and three of its businesses--iPhone, Services, and Mac--saw double-digit revenue growth.

But Google/Alphabet revenues surpassed those of Apple for the first time in a year. And worries over Apple's uncertain guidance on the future impact of chaotic U.S. tariffs halted a stock rally.

No one is concerned about Apple's financial performance in the short term. But the company faces an even bigger issue in AI, a quickly evolving technology that's emerging as an existential threat to the company. And AI is problematic for the company both short- and long-term. The...