Apple forecast cheers investors after mixed holiday results
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Apple's biggest hurdle may be in AI, where it remains behind many of its tech peers.
PHOTO: BLOOMBERG
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LOS ANGELES – Apple gave a reassuring revenue forecast for the current quarter, helping boost shares of the world’s most valuable company after its holiday results showed jarring declines for China and the iPhone.
Sales will grow by a percentage in the low- to mid-single digits, the company said during a conference call on Jan 30. Though that is in line with the roughly 5 per cent that analysts have been predicting, it was enough to soothe the nerves of investors following a mixed quarterly report.
The shares climbed more than 3 per cent in late trading, rebounding from a drop. They had fallen 5.1 per cent this year through the close, part of a broader tech stock decline.
Revenue from China plunged 11 per cent to US$18.5 billion (S$25 billion) in the fiscal first quarter, which ended on Dec 28, Apple said earlier. Analysts had anticipated a gain to US$21.6 billion. Sales of the iPhone, meanwhile, dropped less than 1 per cent to US$69.1 billion. Wall Street projected US$71 billion.
The results renewed concerns about China, one of Apple’s biggest markets, where it has struggled to fend off competition from local brands.
The poor performance for overall iPhone sales suggested that the company did not get much of a lift from the rollout of a new AI platform, Apple Intelligence. Still, the new iPhone 16 performed better in countries where the AI features were available, Mr Cook said.
Apple is playing catch-up with its biggest tech peers in AI. A staggered rollout of Apple Intelligence also has meant that consumers have had to wait for many features. And competitors have jumped out ahead in other areas, such as smart glasses. Apple’s wearables business declined over the holidays as well.
Total revenue rose 4 per cent to US$124.3 billion in the period, helped by growth in services revenue. Analysts had projected US$124.1 billion on average. Profit rose to US$2.40 a share, beating the average estimate of US$2.35. Like the revenue figure, that number was a record high.
The latest iPhones are not markedly different from the prior models – a factor that may have led some consumers to hold off on upgrades. Though the company has touted the Apple Intelligence platform as a reason to buy the device, its earlier iPhone 15 Pro models can also run the software.
Apple is planning a larger iPhone refresh in 2025, including a replacement for its low-end SE model in the coming months and a thinner iPhone in the fall.
Apple still faces plenty of challenges at home and internationally.
Its struggles in China have stemmed in part from not being able to offer Apple Intelligence in the country. That has made it harder to compete with local brands like Huawei Technologies. Apple is working to find an AI partner that will let it launch the AI platform in China.
In the European Union, where Apple’s AI will not be offered to customers until April, the company is facing continued scrutiny over the dominance of its App Store. The company is under threat of fines if it does not concede to regulators and change policies, including those related to subscription payments, that could weigh on its services results.
Locally, the company is bracing for the possibility of new tariffs during the second Trump administration. President Donald Trump has discussed imposing the levies on goods imported into the United States from China and elsewhere. Right now, Apple makes the majority of its processors in Taiwan via partner Taiwan Semiconductor Manufacturing Company, while most of its devices are assembled in China.
Asked about the possibility of tariffs, Mr Cook said Apple is “monitoring the situation”.
The company’s biggest hurdle may be in AI, where it remains behind many of its tech peers. Apple Intelligence – introduced in stages over a period of months – has suffered from bugs, including inaccurate news summaries. And the homegrown features pale in comparison with offerings from OpenAI, Google Gemini and the latest contender, China’s DeepSeek.
Mr Cook praised DeepSeek during the call, but said that Apple’s approach would still give it an advantage.
“Innovation that drives efficiency is a good thing,” he said. “And, that’s what you see in that model. Our tight integration of silicon and software, I think, will continue to serve us very well.” BLOOMBERG
