Apple clawed its way out of a recent iPhone sales slump during the summer quarter, an early sign that its recent efforts to revive demand for its big product with an infusion of artificial intelligence are paying off.
iPhone sales totaled $46.22 billion in the July-September period, up 6% from the same period last year, according to Apple’s fiscal fourth-quarter report released Thursday. That improvement reversed two consecutive year-over-year declines in quarterly iPhone sales.
The iPhone boost helped Apple achieve total quarterly revenue and profit that exceeded investor expectations, excluding a one-time charge of $10.2 billion due to a recent European Union court ruling which lumped the Cupertino, California-based company with a huge bill for back taxes.
Apple earned $14.74 billion, or 97 cents per share, down 36% from the same period last year. Without the one-time tax hit, Apple would have earned $1.64 per share, above the $1.60 per share forecast by analysts, according to FactSet Research. Revenue rose 6% from last year to $94.93 billion, about $400 million more than analysts forecast.
But investors were apparently hoping for an even better quarter and seemed disappointed by a forecast from Apple that implied sales for the October-December quarter covering the holiday shopping season might not grow as strongly as analysts expected. Apple’s stock price fell about 2% in extended trading Thursday, leaving shares hovering around $221 — well below their peak of about $237 reached in mid-October.
The latest quarterly results reflect the first few days when consumers were able to buy a new iPhone 16 series with four different models designed to handle a variety of AI wizardry that the company markets as ‘Apple Intelligence’. The branding is part of Apple’s efforts to differentiate its approach to AI from rivals like Samsung and Google, which have had a head start in bringing the technology to smartphones.
While the iPhone 16 was built specifically with AI in mind, the technology only became available Apple released a free software update earlier this week that activated its first wave of technological tricks, including a feature designed to make its virtual assistant Siri smarter, more versatile and more colorful. And those improvements are only available in the US for now.
“This is just the beginning of what we believe generative AI can do,” Apple CEO Tim Cook told analysts on a conference call Thursday.
Cook said he plans to expand AI iPhone features to other countries in December, as well as roll out other software updates that will inject even more of the technology into the iPhone 16 and two high-end iPhone 15 models which are also equipped with the special computer chips needed for the slick new features. The December expansion includes an option to connect to OpenAI’s ChatGPT to take advantage of technology that Apple doesn’t make itself. More languages
Investors are betting that as Apple’s AI becomes more widely available, it will prompt the hundreds of millions of consumers using older iPhones to upgrade to newer models to get their hands on the latest technology.
“We believe this is a compelling case for an upgrade,” Cook said. But Investing.com analyst Thomas Monteiro believes that iPhone sales would already increase at a faster pace if consumers were overwhelmed by Apple’s AI technology, increasing pressure on the company “to do better overall.” work and impress the public.”
