Apple reported a sales rebound for the fiscal third quarter, ending a streak of revenue declines as it gears up to integrate new artificial intelligence (AI) features into its product lineup, which is anticipated to drive strong demand for the upcoming iPhone.
The results, announced last Thursday, cover the April-June period—traditionally a slow season for Apple as consumers await the latest iPhone, typically unveiled shortly after Labor Day.
This quarter, however, Apple achieved a 5% increase in revenue from the previous year, reaching $85.78 billion and surpassing analysts’ expectations. The company reported earnings of $21.45 billion, or $1.40 per share, marking an 8% rise compared to the same quarter last year and exceeding forecasts.
Despite this positive turnaround, Apple’s share price exhibited volatility during after-hours trading as investors digested the earnings report.
Sales of the iPhone, Apple’s flagship product, continued their decline, falling 1% year-over-year to $39.3 billion. This drop was less severe than the 10% decline observed in the previous quarter, suggesting a potential rebound on the horizon.
Apple is preparing to launch a range of AI features designed to enhance its virtual assistant, Siri, and introduce innovative functions such as drafting text and generating unique emojis. These features will be part of a free software update due this fall, but will only be available on iPhones equipped with a special chip found in two high-end models released last year.
The forthcoming iPhone 16 is expected to include this AI chip, which analysts believe will drive consumers to upgrade their devices. This anticipation has already led to a 13% surge in Apple’s stock price since the company previewed its AI capabilities in early June, adding approximately $400 billion in shareholder value.
“I believe it will be a very key time for a compelling upgrade cycle,” said Apple CEO Tim Cook during a conference call with analysts.
The expansion into AI could also boost Apple’s services division, which saw a 14% increase in revenue to $24.21 billion for the quarter. However, the services sector faces regulatory challenges that could impact its performance.
A significant revenue source for Apple—a deal making Google the default search engine on the iPhone and Safari—is under scrutiny in a high-profile antitrust case filed by the U.S. Justice Department. A ruling is expected by the end of the year. Additionally, Apple is facing another antitrust lawsuit from the Justice Department alleging anti-competitive practices related to iPhone competition. Apple has denied any wrongdoing and is seeking dismissal of the case, with a decision anticipated in the coming months.
Apple’s sales in China continued to decline, with revenue dropping 7% year-over-year. This trend is concerning for investors, as China remains a crucial market for the company.
