Apple on Thursday reported record quarterly sales of the iPhone, thanks to new, higher-priced models, which enticed holiday shoppers and helped drive a rebound for the brand in China, the largest smartphone market in the world.
That surge led Apple to its most profitable quarter ever. Profit for the three months ending in December rose 16 per cent from a year earlier to $42.1 billion (€35.3 billion).
Revenue also topped previous records, rising nearly 16 per cent to $143.8 billion, the largest quarterly growth since 2021.
In September, Apple introduced redesigned iPhones: a thin model called the iPhone Air and an overhauled iPhone Pro, which features a raised bump across its back. The company also raised the price of some iPhones by $100.
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Those changes, coupled with robust holiday spending, continued to lift iPhone sales in the quarter. Revenue from iPhones was $85.3 billion, up 23 per cent from the same period a year ago.
The “staggering level of demand” has constrained the company’s ability to keep up and resulted in low inventory, said Tim Cook, Apple’s CEO, in a call with analysts and investors. “At this point, it’s difficult to predict when supply and demand will balance.”
The newest versions of the iPhone also appealed to customers in China after years of weak sales there. Apple’s iPhones made up 22 per cent of smartphone shipments in China in the quarter — more than any other company, including local rivals — after lagging a year earlier, according to Counterpoint Research, which tracks the smartphone market.
Apple reported its sales in China rose 38 per cent to $25.5 billion in the quarter.
“I think the product design and the product features in the iPhone 17 family really resonated with consumers in China, which we’re super excited to see the enthusiasm,” said Kevan Parekh, Apple’s chief financial officer, in an interview. “Honestly, it exceeded our expectations.”
Apple’s results topped Wall Street’s predictions. Analysts had expected quarterly revenue of $138.38 billion and profit of $39.49 billion. Apple’s share price rose as much as 2 per cent in after-hours trading.
Apple has lagged behind other tech juggernauts in the artificial intelligence race. Rivals are spending tens of billions of dollars on developing the technology and building data centres, the computing sites that power the technology. They have trumpeted the technology’s benefits for their businesses.
Apple has taken a different tack, slowly rolling out AI features and working with other companies. This month, it said it would use technology developed by Google to power AI products including its personal assistant, Siri, which is expected to be upgraded this year.
Apple’s results suggested the company has avoided the effects of a global shortage in memory chips, which have become scarcer and more expensive because of increased demand from AI chipmakers like Nvidia and AMD.
Contracts between consumer electronics makers and their suppliers typically last six months, which means companies like Apple could face higher costs for memory later this year, said Mehdi Hosseini, an analyst at Susquehanna International Group, a quantitative trading firm.
“They have the scale, and they have the size to procure memory,” he said. “The question is: How can they absorb much higher prices?”
For the quarter, Apple’s revenue from services, which include the App Store and Apple Music, rose nearly 14 per cent from a year ago to $30 billion.
Last week, the company said it would raise the fee for some transfers from Apple Cash, its competitor to the digital payments app Venmo.
Apple reported mixed results in other parts of its business. Sales of iPads rose 6 per cent to nearly $8.6 billion. But sales slowed for wearables, which include the Apple Watch and AirPods, and Macs.
US president Donald Trump’s trade policy continues to affect Apple’s bottom line. The company makes almost all of its products in countries facing high tariffs, such as China. In October, Apple said it expected to pay about $1.4 billion in the quarter. Parekh said the company “landed kind of where we expected.” – The New York Times
