SAN FRANCISCO — Apple will introduce paid tiers for its artificial intelligence features through iCloud+ subscriptions, outgoing CEO Tim Cook said. The company's stock fell 7.4 percent to $308.91 during concerns over supply constraints. Cook transitions to executive chairman on Sept. 1.
Cook outlined Apple's hybrid AI strategy, which runs some workloads directly on iPhones and Macs. He described that on-device processing capability as a "competitive weapon" during his final earnings call as chief executive.
Hyperscaler peers including Alphabet, Amazon, Meta and Microsoft have each committed more than $100 billion to capital expenditures this year, much of it flowing into Nvidia-based data centers that power AI models from OpenAI and Anthropic. Apple's June quarter capital expenditures totaled $2.46 billion, below a StreetAccount estimate of $3.44 billion.
Cook cited Disney as an example, saying its creative teams use Mac for on-device AI workflows, cutting cloud token expenses and protecting intellectual property.
The upcoming Siri AI launch this fall will test the hybrid model. Siri will rely on the iPhone's processor to interpret user queries and activate appropriate on-device AI models, keeping common tasks localized.
On-device models have limitations on complex AI tasks. For functions like image generation, Apple will use Google Cloud infrastructure running on Nvidia GPUs and Intel CPUs.
Apple previously indicated it would cap users on its cloud AI models, with iCloud as the path to higher limits. Cook confirmed that direction, saying Apple aims to use AI as a selling point for iCloud+.
"We do believe there will be people that want to use it a lot, and so we will have some kind of upgrade possibilities on iCloud+," Cook said. He added that Apple did not have a complete plan for charging users at the time of his remarks.
Cook said the company has been "growing our opex and spending more in AI in general," signaling a shift in internal resource allocation toward AI development.
Apple's stock decline contrasts with gains among cloud-focused peers. Alphabet rose 6.7 percent to $356.13 and Amazon gained 15.3 percent to $271.58. Nvidia rose 2.9 percent to $200.75. Meta gained 3.3 percent to $556.71 and Microsoft rose 3.0 percent to $464.72.
