Apple’s best quarter yet, but iPhone sales dip despite AI push

Apple reported its “best quarter ever” despite missing market expectations for iPhone sales during the holiday season. The company posted a profit of $36.3 billion and record revenue of $124.3 billion for the year-end quarter. CEO Tim Cook highlighted the success, stating the company had “the best-ever lineup of products and services” for the holiday season.

However, iPhone sales fell short, totaling $69.1 billion, down 0.8% from last year and about $500 million less than anticipated. Analysts had expected $71 billion, according to Bloomberg. The 1% decline was not entirely unexpected, as Apple’s first AI software update, launched just before Halloween, had yet to reach markets outside the US. Additionally, many customers had yet to experience Apple’s new AI capabilities.

Revenue growth came primarily from Apple’s services sector, which includes Apple Music, iCloud, and Apple TV. The services division generated $26.3 billion, up from $23.1 billion a year ago. CFO Kevan Parekh emphasized strong operating margins, which boosted earnings per share to a new all-time high. Parekh also noted Apple’s active devices base reached a record across all regions.

The Americas remained Apple’s largest market, contributing $56.2 billion in revenue. Europe showed significant growth, generating $33.9 billion. Despite the iPhone’s dip, Apple shares rose nearly 3% to $244.67 in after-market trading.

Apple’s AI features, branded as Apple Intelligence, drove positive outcomes in regions where they were available, but Cook acknowledged the challenge in markets like China, where Apple’s AI rollout is yet to happen. He described China as “the most competitive market in the world,” as local competitors surged ahead with increased shipments, overtaking Apple as the top-selling smartphone brand.

Overall, while iPhone sales dipped slightly, Apple’s strategic expansion in services and AI innovations fueled record revenue and profit, reinforcing its market leadership despite challenges in key regions like China.