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Just want to get to Apple. Let's get to it. First quarter revenue one hundred and forty three point seventy six billion, Yes, a big beat. One hundred and thirty eight point four billion was what the street was expecting. First quarter EPs also a big beat. Two dollars eighty four cents a share. The street estimate was for two dollars sixty eight cents a share Greater China. They've been struggling there. Revenue in Greater China twenty five point fifty
three billion dollars, folks, That is a beat. Twenty one point eighty two billion dollars was what the street was expecting. That's a new all time EPs record though overall, and the install base now has more than two and a half billion active devices. Well, got to say investors like in this report. In the Aftermarkett still up about two percent here in the postmarket trade. Hey, let's see what Bloomberg News Managing editor for Global Tech Consumer Tech thinks
about this. He is Mark German, knows everything about this company, lots of exclusives. This feels pretty good.
Tim Cook has to keep his job, at least for now. This is a massive, massive, massive quarter. This is a home run. Their greatest quarter ever by orders of magnitude. It's a gigantic beat on overall revenue. China is back. You have a big beat on the iPhone in particular. Eighty five billion dollar quarter is just insane. The installed based two and a half billion. The numbers are just beyond excellent. We could ignore the fact that they missed
on wearables, home and accessories. We can ignore the fact they missed on Mac. We could ignore the fact that they barely you know, crossed expectations on services. I guess none of that matters when the iPhone is selling so well. But still there's the big existential question of what's next. It's an important question because of AI and Apple absolutely needs to figure out what's AI strategy. There needs to
be an AI reckoning of some sort there. But they just bought themselves a very long time with this just insanely great quarter.
So let's talk about a couple of the areas that you highlighted there. One is China and Another one is the sort of the concerns that people had about memory chips in this quarter and the rising prices of memory chips. How was Apple able to navigate this so it didn't hit its margins like people thought it would.
They buy components and memory components quarters and months in advance, sometimes years in advance. They have these deals struck, so they're working off of numbers and pricing and materials here that really give them extensive pricing power over competitors. So we'll hear more about that on a call today, But it seems like they're fine.
Mark, I love this. I mean, I'm looking at our live blog, so you must have like kicked this out before you jumped on air with us. But you did mention that the significant things on the call. You you've already talked about the AI strategy succession. You've kind of said maybe that's off the table for now because this was such a blowout quarter. You talk about the long term viability of the business if it doesn't get its
AI act together. It's hard to even think about that when you see the numbers here and just what a big company this is and how significant is I feel like in so many different people's lives, like I have an Apple household. I think Tim has an Apple household. Is that is that really the long term viability if they don't get AI together.
Call me Tim Apple.
In fact they do, that's.
Yes, I said long term right and the talking really and walking really long? Okay, uh, the little, the little, the really long term here right, Like, at some point there is going to be a need to fulfill these AI desires and you know they're going to have to figure that out well.
Onor ag Ranov our BI team. He talked with Tim and I just moments ago, and he talked about, you know how they're working with Google when it comes to AI, relying on them right now for their models, and so they're not doing the big AI spend. That makes sense for now too. So do you agree that that's kind of a smart strategy now and kind of waiting it out a little bit, But at some point they've got to kind of do their own thing.
It's not that they're waiting it out. It's that they have no choice, They have nothing internal. So it's not that they're waiting it out, it's that they need to do it. And so they're partnering with the best partner they can that's going to offer them the best pricing power, which for now is Google. They initially wanted to work with Anthropic, but from a pricing standpoint, that didn't work out. They couldn't work with open Ai because they're, you know,
hardcore competitors at this point. So Google is all who was left. And obviously the judge didn't break up the search deal there, so it made sense and it'll aligned pretty nicely for them.
Okay, do we know yet how Apple was able to beat expectations in China once again for the first quarter the most recent quarter, Greater China revenue came in at twenty five point five to three billion dollars. Twenty one point eight two was the estimate. You said it minutes ago. It is back in China. You're holding up an iPhone right now. That's what they did.
I'm answering your question. I'm answering your question.
It was the iPhone seven color orange. Oh, it's the color orange. It's that easy.
It is the Promax. No, it's design. People buy the new designs. This is the first new design in half a decade. It got it done. That's why you do new designs because you're trying to bring in new customers, why does for upgrades? And but that's the way to do it.
Didn't They know that?
Of course they know that, But it takes time to do these new designs and you kind of want to get it right. And then you can't do it too often because if you do it too often, it doesn't have the power that it has if you do it only every so often.
Hey, I want to roll into this a story you've got on the Bloomberg that you put out today, and this has to do with Apple buying the Israeli AI startup that interprets facial movement QAI. Is this important?
I think it's going to enable some features for future air pods and smart glasses and mixed reality headsets and all that, but it's not fundamental to the overall AI strategy, which I think they're still trying to figure out. Also, just one piece of the puzzle, Okay.
Mark. Another story that you reported on this week, Apple's Tim Cook calls for a de escalation after Alex Pretti's shooting in Minneapolis. There's this thread that Tim Cook is trying to a needle that Tim Cook is trying to thread. He was at the White House on Saturday, and to do a.
Very good job. Why not the needle. Well, I think his statement was kind of worthless in some respects. I think that he's spent. I don't know if it's at this statement talking about how the president, the one who's overseeing the policies that led to the situation of Minneapolis, has his ears wide open to listen to feedback. I mean, I'm not sure that's what his employees, who are sort of revolting internally about this, we're looking for. I think they were looking for Tim Cook to take some sort
of stand here, and he really didn't. You know. From his perspective is he's scared to upset Trump and get tariffs and other policies slapped onto Apple's business. So you'll see him continue to do what he's doing, because this is not about taking a stand at this point for him, this is about protecting the underlying business, and the results speak from themselves. Underlying business seems pretty well protected.
Great stuff as always, and we'll be looking for your reporting. He is Mark URMs, Thank you, Mark, Managing editor for Global Consumer Tech for Bloomberg News. Out there out there on the West Coast, well, let's.
Bringing Ed Ludlow. He's the coast of Bloomberg Tech on Bloomberg TV. He joins us from our San Francisco bureau. Ed the story from Mark German is out sales trouncing estimates after iPhone fuels record quarter. Tim Cook called the demand quote unprecedented. Is this all about the iPhone doing well around the world?
Old? Yeah, all about the iPhone And in some ways it's like an issue of chronology and timing, right. Think about when Apple announces the iPhone seventeen generation and we're all there and Cooper Tino for it, and then it goes on sale and you have the holiday quarter, so you know, actually it goes a little bit beyond that. Yeah, you know, this is where the Bloomberg terminal comes in useful. So that is a big beat. You can just see
it looking at the headline on a dollar basis. But not only is it nine percent above consensus even the top end of the most bullish ranges on how this iPhone would do, we're only about eighty one billion dollars. I think it came in above eighty five billion dollars. So they've done something. Either the phone has got traction or they've done something smart with the timing of it and it's sold well. The bit that's missing, of course, is that that commentary does not have anything specific to
do with Greater China. We know the numbers in Greater China are really good, but how did this iPhone do there?
Yeah, like, is it just whoa just a good quarter or do was it luck or was it really strategy? Right of understanding.
I'm super cautious because sometimes we've relied on third party data like you. I won't name it, it would be a bit unfair, but there are various third party data sets that say, oh, no, Apple's doing really bad.
You're talking about it's okay, okay, I'll.
Stick to my guns and you know, and then Apple comes around with earnings and the opposite has been true on more than one occasion. But this occasion, like the third party data that this sort of incremental and anecdote of people queuing up for the iPhone seventeen in all markets, but like Greater China, it was kind of there. So so that's interesting. Where else do you want to go?
I mean this, you know, this is Apple.
There's anything we want to go to AI? Because yes, you want to ask me about the thing that they have nothing to say about.
WHOA sure every analyst is really pointed to that. I mean, we can we can talk about the relationship that Apple has with with Google and for gem and we could talk about all the money going to Open AI potentially from Amazon and other companies, about a potential one hundred billion dollar fundraising around We could talk about Apple relying on third parties rather than building its own Is there a risk in doing that?
I go back to basics, and you know, I kind of rely on Bloomberg's Mark Guman, who is one of the world's leading journalists when it comes to covering not just Apple but consumer electronics. And in the context of this earnings print, what he's written is probably true that Apple has done enough to mask over or allay the concerns that investors have about a lack of progress in
AI as a product. You know, the reporting's quite clear, and it's been announced now officially, right that at least on the interim, Apple's AI generation of Siri will be underpin underpinned by Gemini. And Mark's reported a lot about the financials around that. Right, it's a one billion perannum agreement. We don't. We don't and you won't get this sort of announcement like here it is, here's the date it's coming, and this is what it can do until it's here.
You know, that's not how Apple operates.
Yeah, it's just you know, I mean it's pretty like like where do you go? Where do you go?
You know?
Here we are looking. I mean the stock isn't up as much as it was earlier. We were talking about, you know, more than a two percent gain. I think at its highs here in the aftermarket, it's just up about three quarters of one percentage point. What is it that they need to do? Maybe on the call? Is it ai? Is it that this is sustainable, this is a strategy, this is you know, we figured out China.
Like, what is it? Well? You know that I don't forgive me because I was blogging, I didn't hear what you guys were talking about just before. But in this very limited earnings release and statement, you guys maybe you went over the risk factors and forward looking.
Yeah, we talked about that. We talked about that, you know, I talked about how you started pointing that out back in May of last year.
In May of last year, I was sat next to the you two at New York studio, do you remember, and we were like, oh, that's interesting, and they've never said that before.
But that was only your first report post Liberation Day, right.
The only observation I'll make in line with that is that this release also says nothing about the environment for memory chips. And you know, like memory chip prices are very high.
But their margin was so good, right.
And their margins were pretty good, and there's a scarcity, and that the principal difference is like this. This is why it's so fun to cover hardware companies. And it's a privilege to be a technology journalist when you get access to all these companies and speak to the CEOs. If you're a very big company, you have leverage with your supply base. If a supplier has to choose, I've got this number of things and I can only send them here, or I can send them there, or I
can split. It helps to be Apple, is what I'm saying. And there are companies that I've covered whose CEOs you know, will privately just agonize over how difficult it is to convince supplies to give them the things they need. So on the call that will come up. You know, the cell sider likely to ask about it.
But you know, there are high prices, and then there's Apple dealing with high prices. And when I asked Mark this question about how they were able to successfully navigate these higher memory prices, he said, well, one they're Apple, and two they buy so far in advance, and they buy the components too that go in, so at a certain point ed it'll hit them.
Right.
Well, it's not just that the memory prices are high. The reason that memory prices are high is that historically memory dram and and flash memory is a very cyclical up and down business. Boom and bust. You know, that's what I and King would say, boom and bust in King leads are semiconductive coverages right at Apploomberg. And it is correct that Apple supply chain teams are its secret source. You know, that was Tim Cook's whole thing. He was
coo like, that's what he was good at. But the reason prices are high is because of scarcity of availability, you know, because there is such demand for equivalent chips that are going into data centers and so like Mark's answer is appropriate. Apple has leverage and the ability of scale to say like, Okay, we have got ahead of this, and one would imagine that their supply chain team is sophisticated enough to have foreseen some of the things that we're now experiencing in that market.
So the first thing Mark said to us, I no, no, you were blogging ed and you were looking at the results. Was Tim Cook just bought himself time? Tim Cook gets to keep his job. I mean, there's been a lot of questions about succession. Mark says, That's one of two questions he would ask on the call. The other would be about AI in your view, was his job not at risk? But you know there are questions about who leads this company after Tim Cook.
I am not Bloomberg's Mark g What right is that? When Mark did that recent reporting and it's been it's been over a period of time about which executives are now more at the forefront of Apple's future, he was crystal clear in that reporting that there is no suggestion that Tim Cook being replaced or stepping down or retiring is imminent. You know that that that this was a
longer term thing. What I would reflect on is the conversations that I have with people in industry and those that come on the show and talk about it is you know, Tim cook is is the operator that many people would want. In an environment like this where we still have trade and tariff considerations, the movement of goods between borders from point A to point B is quite difficult. And as we just talked about, you know, like specifically memory pricing, that's within his you know, his his range.
This is not me speaking, This is how people would relay it to me. Mark when he goes on air and when he writes, and again I'm not speaking on his behalf. He would talk a lot more about the product you know, fresh products, reiterated and renewed products, in the product pipeline for the future. And right now, I don't know that people are necessarily so worried about that, at least in my world. They are worried about when they're going to get the software bit right with AI.
You know, it's interesting, you say, AI. It's something we talked about just briefly with Mark German. It's a story that he put out Apple bys Israeli AI startup that interprets facial movements. He's like, you know, interesting will help in terms of I guess product development, but not necessarily a big big deal.
So Ed, we have one time for one more question, and we'd be really remiss if we didn't ask you your view on AMAZ. This news come in just late in the day, switching gears a little bit still on Ai, Amazon talk and talks to invest fifty billion dollars and open Ai expand tizzed this could be part of a one high hundred billion dollar funding round, which would value
open Ai at more than eight hundred billion dollars. When we're talking about a funding round of one hundred billion dollars, I mean we're talking about just the massive, massive scale. What does it mean that that Amazon could invest this much money.
Well, Amazon probably can invest that much money. You know. What we've seen is most of the hyperscalers that were wedded to one player have diversified, and Thropic and Microsoft deepened their interaction. And Thropic was very heavily aligned with Amazon. Google and Anthropic have very heavily aligned and propic relies on TPUs. Amazon from a software perspective, has tried to accommodate all the players on its Bedrock platform, which is basically a workplace where you can either train or build
on top of existing models. So the financials are there, like if you have a if people are watching that are investors in those companies, phone me explain the dilution, to me, explain the post and pre evaluation. But open ai needs capital. It is coming from multiple places apparently, and one would imagine based on the reporting that's been done by Bloomberg and others, this is a big, large anchor round before a future I PO as well of some part of the open ai entity.
The scale is just otherworldly, the amounts of money that we're talking about right now,