Apple Inc. delivered a mixed outlook to investors in its first quarterly report under Chief Executive Officer John Ternus, with tightening profit margins overshadowing an upbeat sales forecast.
Dan Ives, Partner at Yorkville Ives & Co., discusses the AI buildout and recaps Apple and Palantir earnings.
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What Dan Ives said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Dan Ives said Apple's AI strategy is 'genius' because the company spent little on AI while growing its install base, and now it is 'go time.' He estimated 20% of the world accesses AI through an Apple device and predicted AI will make up about 15% of Apple's services revenue over the coming years, adding $75 per share of incremental value. Ives valued Apple's services sum-of-the-parts at $150 to $175 per share, with services margins double those of hardware. On capital expenditure, he argued hyperscalers must keep spending or be left behind, citing trillions in backlog and parabolic free cash flow in 2027-2029. He called Palantir's commercial business 'off the charts' and predicted generational tech M&A and capital raises over the next two years, citing Marvell's recent deal. He also discussed Penn State football's disappointing season and bowl prospects.
Key takeaways
AI will be about 15% of Apple's services revenue over the coming years, adding $75 per share to the story.
Apple's services business is worth $150 to $175 per share on a sum-of-the-parts basis, with margins double hardware's.
20% of the world accesses AI through an Apple device, a key opportunity and challenge for monetization.
Hyperscaler capital expenditure backlog is trillions of dollars; free cash flow will be parabolic in 2027-2029.
Tech M&A and capital raises will be generational over the next two years, with banks hiring senior talent.
Numbers and commitments
Figure
What it refers to
Type
At
15%
Share of Apple services revenue from AI over coming years
Now I do something there. Profitability. When you take away some of these near-term things on memory and things, it's actually increasing. So the view is when you look out over the next four, six, or eight quarters, their free cash flow potential and core business is actually increasing. I looked this morning.
I'll jump in here because I don't want to monopolize. I need a break. I got to get to the Cheetos and Tang. Their free cash flow, modeled for '27 and '28, is almost triple what it was before COVID. It's as simple as that, Paul.
Exactly. And that's kind of what I think the street's excited about right now. Dan, given what you heard on the conference call, how would you characterize the AI strategy for Apple right now?
I think it's genius because to some extent, as Tom's talked about, they've been able to navigate this big squeeze, spend very little when it comes to AI. The install base continues to increase. The upgrade cycle has played out and now it's time. Right now it's go time, which when you think about Gemini and what the ultimate strategy is, is ultimately, from a consumer perspective, 20% of the world accesses AI through an Apple device. That's the opportunity and challenge. Enable devices, make sure they all monetize. From a developer perspective, how do they do that and what's their strategy? I think as developers, they're going to build AI functionality, apps, additional things that are going to happen through the Apple ecosystem. It's Apple that's going to monetize.
For Apple, I think about 15% of services over the coming years will be AI, which is our view, like $75 per share incremental to the story just from an AI perspective. So it's a safety stock in this storm from the large-cap perspective. But then you have AI upside as they monetize. And I think that's now left them in such a great spot for Tim Cook, who's really hardware innovation, and he will define his future.
So as you go out around the world, which is your job, you're always — who knows where you are? You're with Waldo out there. What is the call from investors after? Do they want the high CapEx, negative free cash flow? Just build it and it'll show up. The business will show up. Or are they asking different questions these days?
You get one shot to get this right. So if you take the foot off the pedal, you don't spend on CapEx, ultimately you're going to be left behind. And I think that's why you've seen all the comments from all the hyperscalers. You see all the capital raises from Oracle to Microsoft to Meta, because everyone recognizes the backlog is trillions of dollars. Now, I'm not saying — could some of that fall apart? Could there be some neoclouds that fall by the wayside? But from a hyperscale perspective, from a large-cap perspective, this is viewed as basically a storm that they will get through. And on the other side of it, to Tom's point, the free cash flow as you go into the second half of '27, '28, '29 will be parabolic for these large-cap names.
Okay. I can do this now because I asked to be on Bloomberg. Google, Gemini and all the rest of them. Sum of the parts, Mr. Ives, the services sector — oh, they were a little bit off today. Let's sell our shares. What's the margin? Alexis, what have you last bought on services? Your cherubs — what did they buy that you saw a little bill on your bank statement?
Ives, D. (2026, November 3). Apple Shares Fall Despite Upbeat Holiday Forecast [Interview transcript]. Bloomberg Podcasts. CEOInterviews.AI. https://ceointerviews.ai/interview/3188567/
MLA
Dan Ives. "Apple Shares Fall Despite Upbeat Holiday Forecast." Bloomberg Podcasts, 3 Nov. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/3188567/.
BibTeX
@misc{ives2026_3188567,
author = {Dan Ives},
title = {Apple Shares Fall Despite Upbeat Holiday Forecast},
howpublished = {Interview transcript, Bloomberg Podcasts. CEOInterviews.AI},
year = {2026},
month = {nov},
url = {https://ceointerviews.ai/interview/3188567/},
note = {Speaker-attributed transcript with timestamps}
}
