Apple, the world’s most valuable company, released its latest financial results on Thursday, revealing record revenue and profit, but also a dip in iPhone sales and disappointing figures from its key market, China.
Key Details
Apple reported a record $124.3 billion in revenue for the last three months of 2024, slightly surpassing Wall Street’s forecast of $124.26 billion, according to FactSet. Earnings per share hit $2.41, outperforming analysts’ estimates of $2.35, and surpassing the record set in Q4 2023. Despite these strong overall results, iPhone sales came in at $69.1 billion, falling short of the anticipated $70.7 billion, and marking a decline compared to the same period last year. This occurred even with the launch of the new iPhone 16 featuring integrated AI capabilities.
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Sales in China were another disappointment, totaling $18.5 billion, well below the forecasted $20.9 billion, reflecting an 11% drop from the previous year.
Despite these challenges, Apple saw a 4% year-on-year revenue growth and a 10% increase in net income, largely driven by its high-margin services division. This segment, which includes the App Store, AppleCare, and Apple Music, generated a record $26.3 billion in revenue, up 14% from the previous year.
Ahead of the earnings release, Apple’s shares fell 0.7%, and continued to dip slightly after the results were published. However, the stock remains up over 5% for the week. Apple also benefitted unexpectedly from the market volatility triggered by the launch of DeepSeek’s new AI language model.
Notable Quote
“In the markets where we launched Apple Intelligence, performance has outperformed those where we didn’t,” Apple CEO Tim Cook stated during the earnings call. He described the success in AI markets as a “positive indicator” for future iPhone sales. Cook also highlighted that Apple’s AI-enabled operating systems are expanding in key markets like China and India, fueling optimism for future growth. Following his comments, Apple’s shares rose 3% in after-hours trading.
Context
Apple’s results were released just a day after three other major US tech companies—Microsoft, Meta, and Tesla—revealed their earnings, sparking mixed reactions from investors. Microsoft shares dropped 6% after missing expectations for its Azure cloud business, marking its biggest daily fall since 2022. Meanwhile, Meta and Tesla shares rose about 2% after Meta exceeded revenue and profit forecasts, and Tesla outlined promising plans for future models despite missing analysts’ expectations.
Challenges Ahead
The mixed results stem from concerns highlighted by JPMorgan analysts, led by Samik Chatterjee. The analysts identified three key challenges impacting Apple: declining iPhone market share in China, slow adoption of AI features in iPhones, and currency risks tied to a stronger US dollar, which increases the cost of Apple products abroad. China, which accounts for 17% of Apple’s revenue in fiscal 2024, continues to be a pivotal market for the tech giant.
