Apple executives on Thursday projected robust sales growth, indicating a potential recovery from a decline in iPhone sales as the company introduces artificial intelligence features. This forecast follows a slight decrease in iPhone revenues during the holiday shopping quarter, which fell short of Wall Street expectations due to the absence of AI features in certain markets that were intended to be the main selling point of its latest devices.
Apple CEO Tim Cook announced that these features will be available to more users in Europe this spring, leading to a 3.14% increase in shares during post-market trading. Unlike many competitors, Apple has taken a more cautious approach to AI, avoiding the extensive data center investments seen with companies like Microsoft, and instead focusing on AI as enhancements to promote its latest hardware. This strategy proved beneficial earlier this week when China’s DeepSeek introduced free AI technology, raising concerns about potential price wars, which negatively impacted some of Apple’s rivals’ stocks while slightly boosting Apple’s shares.
Despite challenges in rolling out AI features, Apple’s overall sales and profits were bolstered by stronger-than-expected sales of iPads and Macs in its fiscal first quarter, driven by new chip technology that encouraged customer upgrades.
Apple’s Chief Financial Officer Kevan Parekh provided an optimistic outlook for the current fiscal second quarter, anticipating sales growth in the low- to mid-single-digit range, even after factoring in a negative impact of 2.5 percentage points from a strong dollar. Analyst Gil Luria noted that the guidance exceeded expectations, as iPhone sales gain momentum and Apple moves past a challenging quarter in China.
In the recently concluded quarter, iPhone sales slightly decreased to $69.14 billion, compared to the $71.03 billion analysts had predicted. Sales in Greater China fell to $18.51 billion, down from $20.82 billion a year earlier and below the $21.33 billion expected by analysts. Total sales for the fiscal first quarter, which ended on December 28, reached $124.30 billion, slightly surpassing Wall Street’s target of $124.12 billion, while earnings per share of $2.40 exceeded the consensus estimate of $2.35.
Apple has framed AI as a suite of new capabilities, including features for drafting emails and transcribing phone calls, but the rollout is gradual, and the company has yet to establish a local partner in China for these features. In an interview, Tim Cook emphasized that the AI features, branded as Apple Intelligence, are contributing to the sales of the company’s new devices.
