Apple profits from AI without spending like its rivals

Apple just reported its best fiscal year ever for revenue and earnings per share, and it is earning from the AI boom without the giant building bills its rivals face. iPhone sales rose 17.5% to a September-quarter record of $57.6 billion. Mac sales jumped 24% to $10.8 billion, the highest in four years.

How Apple spends less

Apple spent $2.2 billion on equipment and similar costs last quarter. Amazon spent $77.3 billion and Alphabet spent $51.4 billion. Those totals cover each company's whole business, not just AI, and leave out some AI costs. Apple mixes processing on the device, its own servers and outside AI. Siri AI uses models built with Google's Gemini technology.

How Apple gets paid

• It sells the phones and computers people use for AI, even when the AI comes from another company.
• It takes fees on subscriptions to AI apps sold through the App Store.
• It plans to charge people who want more of its own AI features.

The Wall Street Journal reported that Apple was on pace to collect more than $1 billion in App Store fees from generative AI apps in 2026. The same report said OpenAI has begun steering new subscribers to its website, which skips Apple's cut.

What it means for you

New CEO John Ternus said features that rely on Apple's servers, including Siri AI and smart photo editing, will have usage limits. Customers who need more "will be able to purchase expanded access in the future." No prices have been given. Siri AI launched in beta for US English in September and added five more languages in October.

Macs offer another route. Gap runs AI on Mac Mini computers to prevent store theft, avoiding cloud fees for those tasks. Christie's runs local models on Mac Studio computers. Running AI on your own machine keeps data private and avoids paying a cloud provider for every request.

What is still unclear

Apple has not said how much of its growth comes from AI demand or higher prices. Shares fell in premarket trading after Apple warned that rising memory costs would squeeze profit margins in the holiday quarter. CFO Kevan Parekh also said it is too early to predict how many Siri AI requests will need servers, and that could raise Apple's costs.