From the outside, the scene looks like Apple andTesla They are fighting the same battle, but the numbers tell a completely different story. Behind the grand promises of artificial intelligence, each company is operating according to different calculations. One is opening a new revenue stream from within an existing empire, while the other is spending billions of dollars to build the future it envisions. As both companies race to secure their place in the AI race, the most important question remains: which one truly knows how to turn this race into money? This is what we will answer in this article, where we examine which company is struggling more to transform AI into a golden goose.
Apple and the AI race
Apple and Tesla are not on the same path when it comes to conversion. Artificial intelligence To a source of revenue. While Apple is trying to integrate artificial intelligence capabilities into a business system that generates money for it, Tesla is moving towards building an integrated technology system that includes cars, robots, chips and computing centers, which imposes huge costs on it and puts pressure on its profits.
However, Apple possesses a significant advantage that helps it fund its AI ambitions: the strength of its existing business and its substantial cash flow. The company reported revenue of $109.42 billion, a 16.4% increase, while earnings per share reached $2.02, exceeding analysts' expectations of $1.89. The role of Apple's services sector is particularly noteworthy, generating a gross profit margin of 75.6%. This approach allows Apple to finance a portion of its AI investments using its existing business and services, rather than bearing the costs of building an entirely new ecosystem.
As you can see, Apple's strategy is that it doesn't try to build artificial intelligence itself. Instead, it leaves the development of AI models to other companies, while focusing on owning the hardware and the ecosystem that customers use to run these technologies. This was explained by Tim Cook when he said that Apple has developed the best AI devices in the world, whether through Apple Intelligence and Siri AI or through third-party AI services. In this way, other companies bear the cost of developing models and the risks of building AI technologies, while Apple profits from selling devices and services and generating billions of dollars.
Of course, Apple's strategy is not without risks. Rising memory costs could increase the cost of developing its devices and running AI features. Meanwhile, delays in launching some services in the European Union could postpone the company's access to a segment of users. Apple will also face another challenge with iCloud Plus: setting appropriate prices for AI-related features that cover their increasing operating costs without negatively impacting profit margins in its services division.
Tesla chose the harder path
For Tesla, profits are directly derived from artificial intelligence. The company is developing its FSD autonomous driving technology, Robotaxi self-driving taxis, and Optimus humanoid robot, along with the chips, manufacturing plants, and computing infrastructure necessary to run these projects. Active FSD subscriptions reached 1.48 million, a 56% increase. However, this growth wasn't reflected in the financial results, with earnings per share at approximately $0.33, compared to expectations of $0.54. The operating margin fell to 1.4%, while free cash flow turned negative at $1.09 billion. Meanwhile, the company's capital expenditures are expected to exceed $25 billion (capital expenditures are expenses used to purchase or improve company assets).
You can immediately see that Tesla is very different from Apple. Tesla's AI revenue goes directly into funding computing power, factories, and system development. This means the company doesn't just generate revenue from the technology, but reinvests a significant portion of it into building the infrastructure necessary for its expansion. Tesla's ambitions seem to extend beyond simply developing software for cars; it also aims to... Elon Musk Tesla owns the chips, factories, robots, and fleet itself. However, he also acknowledged supply chain challenges, noting that some parts for the Optimus robot are not yet available. Nevertheless, the world's richest man explained that Tesla is not overly focused on minimizing its investment costs, as it is prepared to spend significant sums on developing artificial intelligence, robotics, and the necessary infrastructure for its future projects.
Who will turn artificial intelligence into profits?
Currently, Apple appears to be in a stronger position to generate revenue from artificial intelligence, as it can rely on existing cash flows and then add new services and features to an ecosystem that includes hundreds of millions of users.
This point becomes even more important as Apple continues to return money to its shareholders. The company spent $25.8 billion on share buybacks in the last quarter, coinciding with increased spending on artificial intelligence. Tesla, on the other hand, does not pay dividends or engage in share buybacks; instead, it is working to arrange credit facilities that could allow it to borrow up to $30 billion.
For Tesla, the performance of Robotaxi will be one of the most important upcoming tests. The company says that the number of miles traveled by its self-driving taxis is growing by more than 10% per week, but the crucial question is whether this increase in trips will translate into real revenue, and whether Tesla will ultimately be able to profit from every mile driven by its autonomous vehicles.
From a shareholder return perspective, the gap in stock performance is even more pronounced. Apple's stock has risen 23.08% year-to-date, while Tesla's has fallen 17.6%. However, Tesla's stock remains significantly overvalued relative to the company's current earnings, trading at roughly 346 times its previous earnings, compared to about 38 times Apple's. This reflects the high expectations investors have for Tesla's future.
Ultimately, the success of artificial intelligence depends not only on the strength of the technology itself, but also on a company's ability to transform it into a profitable business model. Apple is pursuing an approach that leverages its existing devices and services with minimal direct spending. Tesla, on the other hand, is betting on building its AI ecosystem from the ground up, even if it requires billions of dollars. Until Tesla can demonstrate that its products are truly profitable, Apple's less capital-intensive model remains the most promising in terms of realizing a return on investment from AI.
In your opinion, who has the advantage of turning artificial intelligence into a profitable asset? Let us know in the comments!
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