Apple recently warned investors that future products probably won’t reach the profitability heights of the iPhone. In the company’s latest annual report, it acknowledged that the emerging ventures — like AI and VR — may not yield returns comparable to the iPhone, the tech giant’s long-time key revenue driver. The company’s statement noted that “new products, services, and technologies may replace or supersede existing offerings, and may produce lower revenues and lower profit margins.”

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Apple’s trying to catch up with the AI industry. The company has rushed headlong into the field with large investments to compete with companies like Google and Meta, which were quick to jump on the bandwagon after OpenAI. While this signals a pivot in strategy that investors were awaiting with bated breath, it also carries financial uncertainties demonstrated by early adopters.

The long-term revenue generation of the iPhone: The concern is that iPhone’s high margins are bolstered by services like subscriptions and cloud storage that allow the product to provide continuous revenue, whereas Apple has yet to monetize its AI features — which are still rolling out — independently.

They’re facing some potential penalties as well. Sources have confirmed that Apple may face fines for intentionally stifling developers’ ability to promote cheaper offers outside the App Store. These fines could permanently impact its lucrative services sector, according to FT .

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