Apple Inc. (AAPL) reported its fiscal first-quarter earnings, surpassing analyst expectations as services revenue surged. However, iPhone sales slightly missed projections, reflecting ongoing challenges in key markets such as China.
Record Revenue and Earnings Growth
Apple’s revenue for the quarter rose 4% year-over-year to an all-time high of $124.3 billion, aligning closely with analyst estimates from Visible Alpha. The company’s earnings also hit a record $36.33 billion, translating to $2.40 per share, up from $2.28 per share a year earlier and exceeding market expectations.
Strong Performance in Services and Other Segments
Apple’s services division, which includes the App Store, iCloud, Apple Music, and Apple Pay, saw a robust 14% increase, generating $26.34 billion in revenue. This underscores Apple’s successful shift toward a service-oriented business model that provides a steady stream of recurring revenue.
In addition to services, Apple experienced double-digit growth in its Mac and iPad segments. Mac revenue climbed over 15% to $8.99 billion, while iPad sales rose by a similar percentage to $8.09 billion, signaling strong consumer and enterprise demand.
iPhone Sales Fall Just Short of Projections
Despite these gains, Apple’s primary revenue driver, the iPhone, experienced a slight dip. Sales for the device fell just under 1% to $69.14 billion, missing analysts' projections. This marked the first full quarter since the iPhone 16's release in September, indicating potential market saturation and competitive pressures.
A key factor in the iPhone’s underperformance was declining sales in China, where competition from domestic manufacturers like Huawei and Vivo has intensified. The Greater China region was the only market where Apple recorded a year-over-year revenue decline.
CEO Tim Cook Highlights Apple Intelligence and Market Trends
Apple CEO Tim Cook addressed concerns about iPhone sales on the company’s earnings call, noting that the iPhone 16 lineup has outperformed the iPhone 15 series in most regions where Apple Intelligence is available. However, regulatory hurdles have prevented Apple from offering its latest AI-driven features in China, affecting demand in that market.
Despite the sales dip, Cook emphasized a record number of device upgrades during the quarter, with active Apple devices reaching an unprecedented 2.35 billion globally.
Outlook and Market Response
Looking ahead, Apple expects fiscal second-quarter revenue growth in the mid-to-low single-digit range, in line with expectations. The company also projects gross margins between 46.5% and 47.5%, exceeding analyst forecasts.
Following the earnings announcement, Apple’s stock climbed approximately 3% in extended trading. Over the past 12 months, the stock has gained more than 27%, demonstrating continued investor confidence in Apple’s long-term growth strategy.
While iPhone sales pose a near-term challenge, Apple’s strong performance in services and other hardware segments suggests a resilient business model capable of sustaining growth in a shifting market landscape.