Apple Shares Surge on Strong Sales Outlook and iPhone Demand Momentum

Apple Inc. (AAPL) stock climbed in premarket U.S. trading after the tech giant delivered a better-than-expected sales forecast, easing concerns over slowing iPhone demand.

Apple Projects Growth Despite Initial iPhone Sales Dip

Following an initial dip after its latest earnings report, Apple shares rebounded as company executives projected low- to mid-single-digit sales growth for the fiscal second quarter—a forecast that exceeded analyst expectations.

The upbeat outlook comes despite a slight decline in iPhone sales during the crucial holiday shopping quarter, attributed in part to Apple’s AI-powered features not yet being available in some markets. However, CEO Tim Cook highlighted that the rollout of Apple Intelligence is already driving stronger iPhone sales in regions where it is accessible.

Apple’s Cautious AI Approach Pays Off Amid Market Volatility

Unlike other Big Tech firms, Apple has taken a measured approach to AI, opting not to pour billions into data center expansion. This strategy helped insulate AAPL stock from the recent DeepSeek-driven market turmoil, which triggered sharp declines in other Silicon Valley giants.

Apple Q1 Earnings: Mixed Results with Strong Services Growth

For the three months ending December 28, Apple reported:

• Earnings per share (EPS): $2.42 (vs. analyst expectations of $2.36)
• Revenue: $124.3 billion (slightly above estimates of $124.12 billion)
• iPhone sales: $69.14 billion (down from $69.70 billion YoY, missing estimates of $71.03 billion)
• Services revenue: $26.34 billion (a 14% YoY increase, surpassing estimates of $26.09 billion)

Apple Faces Challenges in China Amidst Intensifying Competition

One of the biggest weak spots in Apple’s earnings was Greater China, where revenue plummeted 11% YoY to $18.5 billion, falling well short of the expected $21.57 billion. The decline underscores increasing competition in China’s smartphone market, particularly from local brands.

Analyst Take: Apple Intelligence to Drive Future Growth

DA Davidson analysts described Apple’s Q1 results as “mixed”, noting that strong performance in services and AI-driven iPhone sales was overshadowed by weak results in China.

"Apple Intelligence is clearly benefiting iPhone growth where available. While the rollout is slower than expected, more regions will gain access soon, along with new AI features for existing users," the firm wrote in a note to investors.

Key Takeaways: Apple’s Growth Story Continues

Despite challenges in China and a modest iPhone sales dip, Apple’s strong guidance, booming services sector, and AI advancements signal continued momentum. With its measured AI approach and expanding Apple Intelligence features, the company remains a dominant force in tech and global markets.
 

(Sources: investing.com, reuters.com, ChatGPT)