AI gadgets have been a bust so far. Apple aims to change that
Jaque Silva | SOPA Images | Lightrocket | Getty Images
In late 2022, OpenAI’s launch of ChatGPT spurred an explosion of interest in the possibilities for artificial intelligence.
Within months, some of the biggest tech companies in the world, including Microsoft, Meta and Google, joined the party, launching their own AI chatbots and generative AI tools. By the end of 2023, Nvidia proved it was the only company in the world positioned to make huge amounts of money by powering those services.
Fast-forward to 2024, and a big theme in AI involves our consumer favorite gadgets, with tech companies trying to bring AI to phones and laptops.
Earlier this year, Samsung launched its AI-powered Galaxy S24 smartphone. Microsoft, partnering with companies like Dell, HP and Qualcomm, started selling a new crop of AI computers over the summer called Copilot+ PCs. A few weeks ago, Google launched its Pixel 9 series of AI phones.
So far, these new devices have underwhelmed. Rather than creating whole new experiences, they’ve introduced features for making it easier to edit photos, talk to a chatbot or provide live captions for videos. Then there’s Humane’s AI pin, a clip-on gizmo that launched in April and was immediately panned in reviews. By August, reports surfaced that daily returns were outpacing sales.
Apple will try to change the narrative.
On Monday, the company is expected to show off its new family of iPhones, packed with the AI capabilities announced in June. The system is called Apple Intelligence, and it’ll be rolling out over the coming months. Current Apple devices like the iPhone 15 Pro and some newer iPads and Macs will also have access to it.
But Apple Intelligence will be free. So the company needs to convince hundreds of millions of iPhone customers that it’s time for an upgrade.
That’s what Wall Street is watching for when the latest iPhones go on sale this month. Will Apple Intelligence move more iPhones? Or will the post-pandemic sales slump continue?
“The reality is GenAI is still in its early stages and use cases that have been announced are probably only the tip of the iceberg of what’s to come,” said Nabila Popal, a mobile analyst at IDC.
Apple plans to roll out Apple Intelligence in stages. It will initially only be available in U.S. English, and will likely be blocked in countries with strict AI regulations, like China. Plus, many of the features Apple announced in June won’t be ready on Day 1. Instead, they’ll be introduced in phases over the coming months.
Because of Apple’s measured rollout strategy, even the most bullish analysts expect it to take years for the company to get its AI into the hands of the 1 billion or so iPhone users.
Do consumers want AI gadgets?
Apple typically adds modest enhancements to its iPhones each year. The camera gets a little better. The processors are faster. The battery life improves. None of that is compelling enough to get consumers to rush to upgrade every year or two as they did in the earlier days of the iPhone when big hardware innovations were standard. You can expect the same kind of iterative hardware improvements for this year’s phones.
That puts more pressure on Apple Intelligence to deliver. But consumer appetite is a question mark.
Results from a recent survey by research firm Canalys showed just 7% of consumers had a “very high inclination” to make a purchasing decision because of AI. Interest is significantly higher in Apple’s two most lucrative markets, the U.S. and China, but there’s a giant disparity between them.
In the U.S., 15% of respondents said they had a high or very high inclination to buy gadgets because of AI. In China, where consumers tend to care more about tech specs, that number was 43%. The relatively muted interested, especially in the U.S., suggests that Apple will need its marketing machine to tell a compelling story around what AI can do for the typical iPhone user.
“There are lots of interesting features, but you have to bring those to the normal user in situations they can use repeatedly, not just a one-time feature,” said Gerrit Schneemann, an analyst at Counterpoint Technology. “It’s hard to tell that story in a store with a poster or a two-second sales pitch.”
Apple CEO Tim Cook speaks during Apple’s annual Worldwide Developers Conference in Cupertino, California, on June 10, 2024.
Nic Coury | Afp | Getty Images
Apple Intelligence will use the personal data stored on your phone and help supercharge Siri into a more capable assistant. Plus, app developers will be able tap into Apple intelligence, so you can use it everywhere on your phone. Schneemann said that’s a fresh take on AI compared with Google or Samsung.
“There is the potential to help speed up that educational curve and permeate into the market,” he said.
Samsung’s Galaxy S24, its latest flagship device, has sold better than last year’s model. But there’s little evidence that AI is the primary driver, IDC’s Popal said. Apple is in another category.
“The psyche for premium Apple customers is different,” Popal said, adding that many iPhone customers buy their phones using financing plans, which make it easier to upgrade.
More recently, Google launched its Pixel 9 series of phones, which has the company’s digital AI assistant, Gemini, built directly into the software. Google’s smartphones have never been major sellers, but they often show what’s possible on Android phones before those features make their way to Samsung or Motorola devices.
The marquee feature on the Pixel is a version of Gemini that can carry out natural conversations instead of responding to one command at a time, a capability other Android phones with Gemini should get in the future.
While the reviews for the Pixel 9 were positive, it’s still too early to tell if AI can finally juice sales.
In the PC market, Microsoft’s Copilot+ PCs launched this summer, but without their marquee AI feature, Recall. (Microsoft learned the hard way it’s not a good idea to launch a product that takes screenshots of everything you do on your computer every few seconds.) Recall will hit this market later this fall for a limited number of early testers.
Without Recall, there’s not much AI in this batch of AI PCs.
The real benefit for now seems to be the power and performance from the new PC chips from Qualcomm that debuted in Copilot+ PCs. The processors are based on the same technology as your phone chip, meaning they’re still plenty powerful without using up the battery.
“This is the transition of the traditional PC, turning it to look like a mobile device,” said Alex Katouzian, Qualcomm’s general manager for mobile and wearable technology. He said Microsoft is working on more AI features and fixing the privacy issues with Recall.
Microsoft said it expects 50 million Copilot+ PCs to ship this year, which would represent about 1 in 5 PCs expected to be sold. Katouzian said Qualcomm-powered Copilot PCs are “on track” so far.
Still, Copilot PCs made up “a relatively small percentage” of PC sales at Best Buy this summer, CEO Corie Barry said on the company’s most recent earnings call. She added that customers “just want to replace and upgrade” without necessarily looking for a device with AI or spending a premium for it.
Apple’s AI rollout
If Apple can buck the trend and successfully wow its customers with Apple Intelligence, the next step will be rolling it out globally to drive iPhone sales in markets outside the U.S.
There are other roadblocks in its way.
China, where Apple generates nearly a fifth of its sales, requires government approval before an AI model can launch in the country. Apple CEO Tim Cook told CNBC in August his team is working with regulators in China to make that happen.
Then there’s the EU, which has passed a slew of stringent laws regulating the world’s largest technology companies. Apple said this summer it won’t launch Apple Intelligence right away in the EU because of those regulations.
In the meantime, Apple Intelligence users will be members of a relatively exclusive club. Apple’s job is to convince customers to pay up for a new device and join.
“We’re very excited about the value that Apple Intelligence gives to users,” Cook told CNBC in August. “For that reason, we think it’s another compelling reason to upgrade … we’ll see how the season goes once we start shipping, but we’re very excited about it.”
Correction: Humane’s AI pin launched in April. An earlier version misstated the month,
Super Micro Computer CEO Charles Liang at the Computex conference in Taipei, Taiwan, on June 5, 2024.
Annabelle Chih | Bloomberg | Getty Images
Super Micro shares fell as much as 19% on Tuesday after the server maker announced preliminary results for the fiscal third quarter that were lower than analysts had projected.
Here’s how the company’s preliminary numbers compare with the LSEG consensus:
- Earnings per share: 29 to 31 cents per share adjusted vs. 54 cents expected
- Revenue: $4.5 billion to $4.6 billion vs. $5.50 billion expected
Super Micro lowered the ranges from earlier guidance for the quarter, which ended on March 31, according to a statement. The new revenue range implies 18% growth year over year. That’s a large step down from the 200% growth Super Micro delivered a year ago.
“During Q3 some delayed customer platform decisions moved sales into Q4,” the company said in the statement. In addition, the company faced higher inventories from older products, as well as expedite fees. The two factors narrowed Super Micro’s preliminary gross margin by 220 points from the prior quarter.
Shares of server competitor Dell were down almost 5% in after-hours trading, while Hewlett Packard Enterprise was down about 2%. Nvidia shares also fell roughly 2%.
Super Micro shares over the past year.
The pre-announcement is the latest blow for Super Micro, which has been mired in controversy for the past year due to delayed financial filings and troubling reports from short sellers. In February, the company filed its financials for its fiscal 2024 year and the first two quarters of fiscal 2025 just in time to meet Nasdaq’s deadline to stay listed. Last year, after Super Micro delayed its annual report, it lost its auditor, Ernst & Young, citing governance issues.
After more than tripling in 2023, thanks to the company’s position in the AI boom and its sales of servers packed with Nvidia’s processors, Super Micro shares plummeted in the second third and fourth quarters last year, wiping out more than 80% of its market cap.
“We have confidence that our calendar year 2025 growth could be a repeat of calendar year 2023, if not better, assuming the supply chain can keep pace with demand,” Charles Liang, Super Micro’s CEO, told analysts on a conference call in February.
Prior to Tuesday’s announcement, the stock was up 18% in 2025, rallying as the broader tech market was in decline.
Super Micro will go over the results with analysts on a conference call at 5 p.m. ET on Tuesday, May 6.
— CNBC’s Ari Levy contributed to this report.
Snap CEO Evan Spiegel speaks during the Semafor World Economy Summit 2025 at Conrad Washington in Washington, D.C., on April 23, 2025.
Kayla Bartkowski | Getty Images
Snap reported better-than-expected first-quarter revenue Tuesday but declined to provide guidance, citing macroeconomic uncertainties that could weigh on advertising demand.
Shares dropped 13% in after-hours trading.
Here is how the company did compared with Wall Street’s expectations:
- Earnings per share: Loss of 8 cents. That figure is not comparable to analysts’ estimates.
- Revenue: $1.36 billion vs. $1.35 billion expected, according to LSEG
- Global daily active users: 460 million vs. 459 million expected, according to StreetAccount
- Global average revenue per user: $2.96 vs. $2.93 expected, according to StreetAccount
Snap did not offer an outlook for the second quarter, citing uncertainties surrounding “how macro economic conditions may evolve in the months ahead, and how this may impact advertising demand more broadly.”
Analysts had expected $1.39 billion in second-quarter revenue guidance. The company said it expects daily active users to come in near the midpoint of its second-quarter range at 468 million.
“While our topline revenue has continued to grow, we have experienced headwinds to start the current quarter, and we believe it is prudent to continue to balance our level of investment with realized revenue growth,” the company said in a letter to investors.
Like many tech companies, Snap is facing a turbulent macro setup as it grapples with President Donald Trump’s evolving trade plans. Many fear that global trade uncertainty might lead companies to lower guidance or pull back spending this earnings season.
Snap’s cited potential constraints on advertising demand as the reason for holding off on guidance. Ad revenues for the period rose 9% year over year to $1.21 billion. That growth came mainly from direct response advertising. The company also said that brand-oriented advertising revenue dipped 3% from a year ago.
The company isn’t alone. Last Thursday, Alphabet reported first-quarter sales of $90.23 billion, which surpassed Wall Street expectations, but executives told analysts that the company may experience headwinds to its online ad business in the Asia-Pacific region.
Snap lowered its full-year adjusted operating expenses range to between $2.65 billion and $2.70 billion, down from $2.70 billion to $2.75 billion. The company also revised its full-year cost guidance for stock based compensation downward to between $1.13 billion and $1.16 billion from $1.15 billion to $1.20 billion.
Sales in Snap’s first quarter jumped 14% to $1.36 billion from $1.19 billion in the year-ago period. The company reported a net loss of about $140 million, or 8 cents per share. That narrowed 54% from about $305 million, or 19 cents, in the year-ago period. Adjusted EBITDA came in at $108 million, topping a $64 million estimate from StreetAccount.
The company attributed the 8 cents loss to a $70.1 million charge related to cash severance, stock-based compensation expenses and other costs associated with a 2024 restructuring. “These charges are not reflective of underlying trends in our business,” the company said.
Snap posted 460 million daily active users during the period, up from 453 million the previous quarter. The company also said that it reached 900 million monthly active users, up from 850 million in August, the last time Snap provided that stat.
Meta reports its latest earnings on Wednesday, followed by Reddit on Thursday and Pinterest on May 8.
SpaceX’s mega rocket Starship booster returns to the launch pad during a test flight from Starbase in Boca Chica, Texas, Thursday, Jan. 16, 2025.
Eric Gay | AP
As SpaceX awaits the results of a critical election that would turn the location of its Starbase launch site into an incorporated Texas city, lawmakers have declined to give Elon Musk’s aerospace company greater control over a main highway and public beach.
Starbase, where the Musk-led company builds and launches its rockets, is located in Boca Chica, Texas, on the Gulf Coast. Residents of the area are voting on whether to turn the small community into a city, with the election scheduled to conclude on Saturday.
On Monday, the Texas House State Affairs Committee voted against a bill that would have given SpaceX greater control over a highway and public beach access in the likely event the company is victorious in its effort to make Starbase into Texas’ newest city. Around 500 people live in the community today, including SpaceX employees and about 120 children, according to the Texas Tribune.
SpaceX has historically needed to close roads and beaches around Starbase in order to conduct test flights and launches, including for its massive Starship rockets, which Musk sees as a prelude to an eventual Mars mission. Closing off access to beaches in the area has required SpaceX to inform and attain permission from authorities in Cameron County, the southernmost county in Texas.
The frequent closures have contributed to legal complaints against SpaceX, and have drawn protests from local residents and activists, including the Carrizo Comecrudo Tribe of Texas, the South Texas Environmental Justice Network and Border Workers United.
Activists in the Rio Grande Valley area, where Starbase is located, protested and formally lobbied against the bills for weeks. Related proposals could be introduced before the legislature meets again next month.
As CNBC has previously reported, SpaceX has conducted test flights or launches that have resulted in fires and harm to sensitive habitat essential to some endangered species in the area.
In one example, SpaceX was fined by the Environmental Protection Agency for polluting waters in Texas in violation of the Clean Water Act. After those fines, Musk threatened to sue the FAA for “regulatory overreach” but never filed a complaint.
Following a front-page New York Times story in July about the damages to local wildlife, including bird habitat, caused by SpaceX, Musk wrote in a post on his social media site X, “To make up for this heinous crime, I will refrain from having omelette for a week.”
That was a week before Musk formally endorsed Donald Trump for president after an assassination attempt on the then-presumptive Republican nominee at a rally in Pennsylvania. Musk then went on to spend nearly $300 million to propel Trump back the White House, and now serves as an advisor to the president with influence over spaceflight and environmental regulations.
In leading the Department of Government Efficiency, Musk has helped gut the ranks of both the Environmental Protection Agency and the Federal Aviation Administration. Under Trump’s EPA, the U.S. has promised to “reconsider” or target dozens of rules for elimination that currently limit air pollution and wastewater from energy, autos and manufacturing sectors.
Tim Hughes, SpaceX’s head of government affairs, didn’t respond to a request for comment, nor did the offices of Republican State Representatives Gina Hinojosa and Janie Lopez, who introduced the bills to give SpaceX local beach control.
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