On Thursday, Apple Inc. executives projected strong sales growth ahead, signaling a potential rebound from recent declines in iPhone sales, driven by the rollout of new artificial intelligence (AI) features, Apple Intelligence.
This optimistic forecast follows a challenging holiday shopping quarter where iPhone revenues dipped slightly, missing Wall Street expectations partly due to the limited availability of AI features in some markets.
Meanwhile, as CEO Tim Cook announced that these AI enhancements would become more accessible to European users by spring, the statement prompted a 3.14% rise in Apple’s shares during post-market trading.
The iPhone maker has taken a more cautious approach to AI compared to peers like Microsoft by focusing on integrating AI into its hardware rather than investing heavily in massive data centers.
The strategy proved favorable for Apple earlier this week following China’s DeepSeek’s launch of free AI technology, which triggered concerns of potential price wars that hit competitors’ stocks while boosting Apple’s shares modestly.
Amid AI integration challenges, Apple’s overall sales and profits rose, supported by strong iPad and Mac sales driven by new chip advancements. CFO Kevan Parekh gave an optimistic forecast for the current fiscal second quarter, projecting low- to mid-single-digit sales growth after considering a 2.5 percentage point drag from a strong dollar.
According to Gil Luria, managing director at D.A. Davidson, Apple’s management offered guidance that surpassed expectations, reflecting the iPhone’s growing momentum and the company’s ability to move beyond a challenging quarter in China.
In the previous quarter, iPhone sales experienced a slight decline, reaching $69.14 billion, which fell short of the $71.03 billion forecasted by analysts, based on LSEG data. Sales in Greater China also diminished, totaling $18.51 billion, compared to $20.82 billion the previous year, and missed the $21.33 billion anticipated by a Visible Alpha survey of analysts.
Total sales amounted to $124.30 billion for the fiscal first quarter ending December 28, slightly surpassing Wall Street’s expectation of $124.12 billion, as reported by LSEG. Meanwhile, earnings per share were $2.40, notably exceeding the consensus estimate of $2.35.
Apple is marketing AI as a key feature, gradually introducing capabilities like email drafting and call transcription. CEO Cook noted that AI features, known as Apple Intelligence, drove sales in regions where they were available, though there is no specific timeline for their launch in China.
Cook emphasized the performance edge of Apple’s new devices, notably with the new M4 chip in Macs, which enhances AI workload handling. As a result, Mac and iPad sales outperformed expectations, hitting $8.99 billion and $8.09 billion, respectively.
Additionally, Apple’s services sector, encompassing iCloud and streaming entertainment, achieved a 13.9% increase in sales to $26.34 billion, beating forecasts. The wearables division posted $11.75 billion in sales, slightly below expectations.
Jacob Bourne from Emarketer highlighted that while Apple’s gradual AI deployment has faced criticism, robust growth in services and its ecosystem is mitigating some of the ongoing challenges with iPhone sales in China.
