Schwab Network on $AAPL (Nov 3, 2026)

we saw Apple beat revenue and earnings per share expectations, and provided guidance for stronger-than-expected revenue growth in the December quarter, yet I see a 2.25 percent decline.

Is the market focusing almost entirely on these margins , and do you think this is the right thing to do? I think when we look at Apple's situation here, yes, I think people are focusing too much on the margins.

The rising costs of memory and chip components are to be expected. We've seen this continue for some time, but this company is still performing very well. The iPhone performed strongly, representing more than half of the fourth quarter's sales , which is fantastic.

We see continued growth on an international scale for Apple in general. So, there are many positives to be taken, and that's why I remain optimistic about Apple more broadly.

The rising costs of inputs for developing Apple's various products are to be expected, and we have to wait and see what the future holds here. But I believe that can be controlled to bring the margins back to a normal and expected range.

Nick, with all the numbers we got from Apple yesterday, how do you view the strength of Apple's ecosystem right now? Also, what does that tell you about Apple's primary consumer?

Yes, well, look, iPhone sales are really, really strong . And its services are very strong as well. The company's ecosystem is undoubtedly in a strong position.

I think what the company and the market expect from Apple is to excel in the field of artificial intelligence , where they have lagged behind in the past. And I mean, this is where the concern about margins comes from.

Therefore, I believe this is a necessary investment for them.

There are concerns that as artificial intelligence becomes more widely used around the world and consumer demand for it increases, profit margins will continue to decline because it is more expensive than the software hosting costs of the past.

This is an area where I believe Apple should compete. So , I think there is some concern here, both in terms of profit margins, and also a slight concern because this new person is leading us into an area where Apple has historically been weak. So, it will be interesting to see what happens.

James, Nick just brought up the topic of spending. So, of course, we have to talk about the fact that Apple spends far less than many of its giant cloud computing peers on AI infrastructure.

I mean, those percentages are hundreds of percentage points lower. Do you see this as a strategic advantage, or are they risking falling behind in the artificial intelligence race ?

Because much of the talk about Apple lately suggests that it is almost an anti-AI company?

Yes, I wouldn't necessarily say it's an anti- AI company. It is a company that I believe understands its position within the artificial intelligence ecosystem in its broadest sense.

It has Siri, which is where it is heading and making some marginal investments in artificial intelligence, but I don't think that's where Apple sees itself as a player in this broader ecosystem.

I think when Apple looks at the broader market, it's saying, " Hey, we're the ultimate deployment tool for all these AI companies looking to connect with consumers on a massive scale, right?"

The Apple iPhone is one of the most popular phones in the world. So, I think they are aware of this, and perhaps their investments are focusing more on how to make our phones more efficient so that we can support other AI companies that are doing this work.

Therefore, the investment, I would say, is strategically directed in a different direction.

Nick, you make an interesting point about the opportunity available to independent AI developers when it comes to Siri. With Siri's increasing capabilities and the prevalence of AI interactions, do you see Apple as a company with the potential or opportunity to create an entirely new ecosystem of AI-powered applications and services ?

Yes, 100%. So, I think this is where the great opportunity lies. I mean, there's a lot of concern about the margins, but growth in the ecosystem is very strong. And I think there’s a big opportunity with all these commercial agent-related things that are popping up, like Muse, which is the big event this week, and in Silicon Valley, there are a lot of these iMessage-certified agents that are popping up everywhere.

I believe Apple is very well positioned to be the distribution channel for most of these AI applications, whether they are niche applications built by independent developers, or larger proxies owned by major corporations.

In both cases, I think consumers will most likely interact with their AI tools through Apple devices. This appears to be a very strong component of the growth that occurred this quarter.

So, I'm excited to see what comes next from this .

Now, I think much of the investment being made in Siri and Siri's artificial intelligence is really aimed at ensuring the ecosystem continues to be a strong environment through which developers can make their products available to the public.

Because it doesn't just have to be great hardware, it has to be great software too, so that people can deliver the best experiences to consumers across the platform.

James, how do you view Apple's strategy of positioning itself as a platform that connects artificial intelligence to the consumer, without necessarily developing all the intelligence behind it?

Is this ultimately the right step? Is this the right strategy? Or does Apple actually need to have more artificial intelligence technologies to truly control that relationship with the consumer?

I think, as has just been discussed here, that certainly as Siri’s ability to interact with these AI companies and their products improves, this is an area where Apple can definitely get better. And they will continue to work on that.

But I think it is important to build the software as discussed to support all the AI ecosystem activity that will take place. For Apple, ultimately, as I just said , they know they are the platform that distributes artificial intelligence, essentially to connect it with consumers in ways that were not possible before.

So, for them, it really comes down to ensuring the efficiency of their devices, so that they can run all these AI agents and applications on their devices in ways that do not cause additional problems for the consumer, such as reduced battery life or other similar issues.

They want to make sure that their product still maintains the standards, the highest standards that Apple has consistently offered consumers over the past several decades . Well, Apple's performance is better than it was in after-hours trading following the earnings announcement , but it is still down about 2% and dragging the Dow Jones index down with it.