Apple recently shared its expectations for the upcoming holiday quarter, expressing caution as the company integrates its new "Apple Intelligence" AI features. While Apple’s latest earnings showed solid results, the uncertain impact of its AI tools on iPhone sales has caused some hesitation among investors, contributing to a 1.9% drop in Apple’s share price.
Holiday Quarter Sales Projections
For the holiday season, Apple projects revenue growth in the low to mid-single digits, just under some Wall Street expectations. Analysts anticipated roughly $128 billion for this quarter, marking a possible 7% year-over-year growth at the high end of Apple’s provided outlook. Despite otherwise positive quarterly earnings, the limited guidance led to a decline in after-hours trading.
Apple’s Recent Financial Highlights
In its recent quarterly report ending September 28, Apple saw a 6% revenue increase to $94.9 billion, exceeding analyst predictions of $94.4 billion. iPhone sales reached $46.2 billion, up from $43.8 billion a year earlier. Flat sales in China, approximately $15 billion, were an improvement from previous quarters' declines.
The AI Rollout: New “Apple Intelligence” Features
Apple began its AI feature rollout on Monday with updates to iPhones, iPads, and Macs. This first wave of “Apple Intelligence” features includes an upgraded Siri, advanced writing assistance, and AI-powered photo editing tools, currently available only in the U.S. and limited to the iPhone 15 and 16.
Luca Maestri, Apple’s CFO, noted strong customer interest in these new features, reporting that users downloaded the AI-focused update at twice the rate of last year’s software. Apple is also planning additional AI releases, such as a ChatGPT integration with Siri and AI-driven emoji and image generation, expected by year’s end.
Will AI Drive Holiday Sales for Apple?
With Apple Intelligence still in early stages, analysts are questioning whether AI features will significantly boost iPhone sales in time for the holiday season. Tim Cook, Apple’s CEO, and Maestri remained tight-lipped on AI’s projected impact on upcoming sales, suggesting a more cautious approach. Apple’s AI tools are expected to expand and evolve, likely influencing future quarters more substantially.
Changes on the Horizon for Apple’s Leadership
In early 2025, Luca Maestri will step down as CFO, with Kevan Parekh, Apple’s current VP of Financial Planning and Analysis, slated to take over. Maestri’s transition is expected to coincide with further developments in Apple’s AI integration strategy.
Global Market Challenges and AI Competition
Apple’s dependence on Chinese manufacturing partners adds potential challenges amid ongoing U.S.-China trade tensions. Former U.S. President Donald Trump, campaigning for a second term, has proposed additional tariffs on Chinese imports. Cook, however, avoided commenting on political matters, preferring to focus on Apple’s innovation roadmap.
Source: (FT.com)
