Apple Shares Rise After Positive Sales Outlook Signals iPhone Recovery

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Apple’s executives projected relatively strong sales growth, indicating the company’s recovery from a dip in iPhone sales as it begins to roll out artificial intelligence (AI) features. After a slight decline in iPhone revenue during the holiday shopping quarter, which fell short of Wall Street estimates, Apple has made progress in its AI efforts, and investors are optimistic about the future. Tim Cook, Apple’s CEO, stated that these AI features will be available to more users in Europe this spring, leading to a 3.14% increase in shares during after-market trading.

Apple has adopted a more measured approach to AI compared to rivals like Microsoft, focusing on integrating AI features into its hardware rather than investing heavily in massive data centers. This strategy paid off when DeepSeek, a Chinese AI startup, introduced free AI technology that triggered fears of price wars, ultimately benefiting Apple as it helped boost its stock price.

While AI adoption has been slow, Apple saw stronger-than-expected sales in other product categories. The fiscal first quarter of 2024 showed a boost in sales for iPads and Macs, where new chips encouraged customers to upgrade. Apple’s fiscal second-quarter outlook remains positive, with expected sales growth in the low-to-mid single-digit range.

In the most recent quarter, iPhone sales slightly dropped to $69.14 billion, missing analysts’ expectations of $71.03 billion. Sales in Greater China also decreased, bringing in $18.51 billion, below the expected $21.33 billion. However, Apple’s total sales of $124.30 billion exceeded Wall Street’s expectations of $124.12 billion, with earnings per share of $2.40 surpassing the consensus target of $2.35.

Apple has positioned AI as a set of new features, such as drafting emails and transcribing phone calls, but is gradually rolling them out. Tim Cook stated that markets where Apple Intelligence has been launched have seen stronger iPhone 16 family sales compared to those without it. While the AI features are expected to roll out in French and German in April, there is no timeline for availability in China due to regulatory concerns.

Mac sales benefitted from new models, including Mac Minis, iMacs, and MacBook Pros with the new M4 chip. The availability of Apple Intelligence on Macs and iPads, which have more powerful chips, has been a driving factor for upgrades. Apple’s services business, including iCloud, streaming, and other services, saw a 13.9% year-over-year increase, reaching $26.34 billion.

Despite criticism over the slow rollout of AI features, Apple’s services growth and ecosystem expansion are helping offset iPhone struggles, particularly in China. The wearables segment, including the Apple Watch and AirPods, posted $11.75 billion in sales, slightly below analysts’ expectations of $12.01 billion.

 

SoftBank in Talks to Lead OpenAI Funding Round at $300 Billion Valuation

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SoftBank Group is in negotiations to lead a funding round for OpenAI, which could raise up to $40 billion, placing the artificial intelligence developer’s valuation at $300 billion, according to sources familiar with the matter. This potential round, which could set a record for a private company’s single funding round, is in the wake of growing competition from Chinese startup DeepSeek. DeepSeek’s new, affordable AI model has disrupted expectations about the costs of developing and deploying AI.

As part of the funding, SoftBank has valued OpenAI at $260 billion, a significant increase from its valuation of $150 billion just a few months ago. This funding is expected to be in the form of convertible notes, and similar to OpenAI’s previous round, it is contingent upon restructuring the company to remove control from its non-profit arm.

Leading the round would be a bold move for SoftBank, which has roughly $30 billion in cash to invest. While neither SoftBank nor OpenAI has commented on the discussions, it is believed that SoftBank could contribute between $15 billion and $25 billion directly into OpenAI. This money may also go towards OpenAI’s commitment to Stargate, a joint venture with Oracle and SoftBank aimed at helping the U.S. maintain a competitive edge in the global AI race, with plans for up to $500 billion in investments.

Despite the funding talks, DeepSeek’s low-cost AI model has raised concerns within the AI sector. The startup, using Nvidia H800 chips, developed its DeepSeek-V3 model for less than $6 million, spurring questions about whether OpenAI and other labs can retain their dominance as competition intensifies from more affordable alternatives.

 

Lawmakers Urge Trump to Consider New Curbs on Nvidia Chips Used by China’s DeepSeek

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U.S. lawmakers are calling on President Donald Trump’s administration to consider imposing new export controls on Nvidia’s AI chips, particularly the H20 model, which they allege is being used by China’s AI company DeepSeek. Republican John Moolenaar and Democrat Raja Krishnamoorthi, co-chairs of the House of Representatives Select Committee on China, sent a letter to National Security Advisor Michael Waltz urging a review of the U.S. export control system.

The lawmakers expressed concern that the H20 chip, which is not currently covered by existing U.S. export restrictions, is being used in DeepSeek’s newly released sophisticated AI model. This comes amid growing concerns in Washington over China’s rapid advancements in AI. DeepSeek, which recently launched a free AI assistant, claims its technology uses significantly less data and is far more cost-effective than incumbent models, potentially marking a shift in the AI investment landscape.

In addition to the lawmakers’ letter, the U.S. House of Representatives’ Chief Administrative Officer notified offices not to use DeepSeek’s technology, citing an ongoing review. The U.S. government has long been concerned that China could leverage AI for cyberattacks or even bioweapons development, prompting former President Joe Biden to initiate measures to limit China’s access to AI chips.

Nvidia responded, stating that its products comply with all U.S. regulations and that the company is open to collaborating with the administration on AI-related matters.