Key Takeaways
- Bloomberg’s Mark Gurman says Apple’s new Siri can finally do what it was advertised to do, 15 years after launch.
- His co-host argues nobody buys a phone for AI, though Apple’s CFO says AI gives customers a reason to upgrade.
- Apple guided to 7% to 10% growth for the December quarter, after 12%, and analysts expect 8% by fiscal 2028.
- At 37x forward earnings on Nov. 2, against a 29x five-year average, Apple prices in more growth than its guidance shows.
Apple (AAPL) has spent 15 years promising a Siri that works. With iOS 27.3, now in beta, it may finally have one.
Bloomberg’s Mark Gurman, who has used it since the first beta in June, summed it up on the Power On podcast:
“15 years after the first Siri was introduced, Siri can finally do the things that it has been advertised to do.”
His co-host, Vlad Savov, was less moved:
“Nobody’s genuinely saying, I’m buying this new iPhone or this any other device because of AI.”
Apple disagrees. CFO Kevan Parekh told analysts on the Nov. 2 call that AI “offers a compelling reason for customers to upgrade and switch.” Apple did set a September-quarter record for iPhone upgraders, but Siri AI had been in beta for 12 days when that quarter ended.
Apple’s Growth Is Heading the Wrong Way
Revenue rose 12% to a record $114.5 billion in the September quarter, and iPhone sales jumped 17%.
The December-quarter guide called for 7% to 10% growth. Parekh framed that as coming on top of a “phenomenal” December quarter last year, when revenue grew 16%, and Gurman wasn’t buying it: “You can’t make those things additive just because it makes the numbers sound bigger and sound better.”
Supply explains some of it: Chief Operating Officer Sabih Khan said iPhone Duo is constrained.
Analysts expect the slowdown to outlast the holidays. Revenue grew 15% in fiscal 2026, and the consensus calls for just under 10% growth in fiscal 2027 and 8% in fiscal 2028.
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Siri Could Still Earn Its Keep in Services
Apple doesn’t need Siri to sell phones to make money from it. Services had a 76.2% gross margin in fiscal 2026, against 39.3% for products, producing 40.2% of gross profit on 25.8% of revenue.
Apple’s gross margin rose from 43.3% in fiscal 2022 to 48.8% in fiscal 2026, though last year’s gain came from products, whose margin climbed from 36.8%.
That payoff isn’t live yet. Siri AI comes with usage limits, and CEO John Ternus said “anyone who needs greater capacity will be able to purchase expanded access in the future.” With Siri fielding more than 2.5 billion requests a day, even a small paying share could lift Services.
But Apple guided Services growth to 8% to 9% for the December quarter, down from 10%, and Parekh named third-party licensing as a headwind. That’s where Google’s search payments sit, and Gurman expects that revenue to come down as AI eats into Safari searches.
Siri also costs money, and Services absorbs it. Parekh said Siri AI’s cloud costs run through Services cost of sales, and Apple will defer part of each device’s revenue for Siri AI. Add memory prices Ternus called “unprecedented,” and Apple guided December-quarter gross margin to 45% to 46%, below fiscal 2024’s 46.2%.
Apple Stock Is Priced for Faster Growth
Apple traded at 37x forward earnings on Nov. 2, close to its five-year high of 38x and well above its 29x average.
Siri finally working is a real win, and I expect it to help Services over time. But at 37x earnings, Apple also needs people to upgrade iPhones faster because of AI, and so far that case comes from Apple, not its customers.
The full Siri upgrade, which acts inside third-party apps, arrives in spring. If it gets people paying for bigger iCloud+ plans or trading in older iPhones, Apple’s fiscal 2027 could beat the just-under-10% growth analysts expect.
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