Business

Apple profits top estimates even as competition dents China iPhone sales

Silicon Valley group says there are signs rollout of AI features will boost handset demand

An Apple store in Shanghai, China. Photograph: Qilai Shen/Bloomberg
An Apple store in Shanghai, China. Photograph: Qilai Shen/Bloomberg
Michael Acton
Fri Jan 31 2025 - 00:55

Apple’s quarterly profits and revenue crept past Wall Street forecasts, despite lower iPhone sales as it faced mounting competition in China.

The group on Thursday reported revenue of $124.3 billion for its December quarter, above analysts’ estimates in a Bloomberg poll of $124.1 billion and up 4 per cent from the same period in the previous year. Net income climbed about 7 per cent to $36.3 billion, also above expectations of $35.5 billion.

iPhone sales of $69.1 billion were, however, down slightly and below forecasts of about $71 billion.

Revenue for the China region, where Apple has come under increasing competitive pressure from local smartphone makers such as Huawei and Xiaomi, dropped about 11 per cent to $18.5 billion.

READ MORE

Apple said it expected low to mid single-digit revenue growth for the March quarter, despite an expected negative impact of about 2.5 percentage points from foreign exchange headwinds.

The December quarter was the first since Apple rolled out Apple Intelligence, its suite of artificial intelligence features that include a partnership with OpenAI. The features have yet to be introduced in languages beyond English, with the company taking a staggered approach. More languages are due to be added in April.

Apple’s chief financial officer Kevan Parekh told the Financial Times the company was “incredibly optimistic about the profound impact of AI”. Parekh stepped into the role this year, taking over from Luca Maestri, who had been in the position for a decade.

The performance of the AI-enabled iPhone 16 was stronger than in markets where Apple Intelligence was not available, Parekh said, suggesting the suite had piqued the interest of consumers. On a call with analysts, Apple chief executive Tim Cook said the trend was a “positive indicator.”

“They are still holding on to Apple Intelligence as being a driver of sales and saying they have the data to support it,” said Gene Munster at Deepwater Asset Management.

Apple’s guidance for the current quarter was encouraging, Munster said, potentially offsetting any negative impact on its shares from its iPhone sales miss. Shares rose about 3 per cent in after-hours trading.

Apple’s services business, which includes the App Store, iCloud and Apple Pay, posted record revenue of $26.3 billion in the December quarter. Its iPad and MacBook products notched up double-digit growth.

The results come as concerns grow about the impact of Donald Trump’s trade policies. The US president this week promised to impose tariffs on Taiwanese semiconductor manufacturers. Apple’s supply chain relies heavily on exporters in Asia.

Parekh declined to comment on potential tariff risks, saying the company was “closely monitoring the situation”.

Apple’s results follow a week of turbulence for tech stocks, with a rout on Nvidia’s shares driven by anxieties around AI breakthroughs by China’s DeepSeek.

Its shares were insulated from the broader tech market rout, and the $600 billion loss to Nvidia’s market capitalisation this week leaves the iPhone-maker as the world’s most valuable company, at about $3.6 trillion.

Ahead of Apple’s earnings report, analysts had been downbeat about whether Apple Intelligence, with its staggered roll-out that is yet to reach non-English speakers, had provided any meaningful boost to hardware sales in the shorter term. – Copyright The Financial Times Limited 2025

  • Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
  • Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
  • Join The Irish Times on WhatsApp and stay up to date
  • Our Inside Business podcast is published weekly – Find the latest episode here
Business Today

Business Today

Get the latest business news and commentary from our expert business team in your inbox every weekday morning