Tim Cook says Apple is open to buying AI startups

Apple just admitted what everyone already suspected: its in-house AI isn't moving fast enough, and the company is now willing to buy its way out of the hole.

Speaking after Apple's third-quarter earnings report, CEO Tim Cook told CNBC that the company is officially open to mergers and acquisitions as it significantly ramps up AI spending. Cook also noted during Thursday's call that Apple is reallocating a fair number of internal staff to focus strictly on AI.

This comes alongside a surprisingly strong quarter. Revenue rose 10 percent year over year to $94 billion, with iPhone sales up 13 percent to $44.6 billion and Services hitting an all-time high of $27.4 billion.

Scrambling for external lifelines

Behind the revenue beats, the panic around Apple Intelligence is very real. Meta has been poaching top talent, and Apple has already had to reshuffle internally, putting Vision Pro lead Mike Rockwell in charge of AI and Siri back in March.

Now, the iPhone maker is looking outside its walls. Bloomberg reported that Apple leaders discussed acquiring search startup Perplexity in June, and may also lean on OpenAI or Anthropic to power an upgraded, LLM-based Siri.

That revamped assistant was already delayed after software head Craig Federighi admitted it simply was not reliable enough for the public. Cook insisted the company is making good progress on a more personalized assistant, but provided no launch date.

Meanwhile, external pressures are piling up. Apple noted in May that tariffs could cost it at least $900 million in the June quarter, with Donald Trump threatening tariffs of at least 25 percent unless production returns stateside, despite Apple shifting some manufacturing to India.

Why it matters

For everyday Apple users, this means the wait for a genuinely smart iPhone is far from over. If you were banking on the upcoming iPhone 17 and iOS 26 to deliver a fully baked assistant, it is probably wise to keep expectations in check. The core features are still struggling with basic reliability behind closed doors.

For the broader tech ecosystem, Cook's willingness to pursue deals could set off a massive wave of consolidation. Apple historically prefers quiet talent-grabs over flashy mega-deals. If Apple actually writes a multibillion-dollar check for a player like Perplexity, it forces Google and Microsoft to play defense on distribution.

We think shifting gears to M&A is the right pragmatic move, but it highlights just how flat-footed Apple was caught. Shuffling mixed-reality executives into AI roles and moving existing staff around can only do so much. Buying an external foundation model or search engine solves the speed problem, but integrating it into Apple's strict on-device privacy framework is going to be a major headache.