Apple Reports Strong Earnings, But iPhone Revenue Falls Short
Apple (AAPL) released its fiscal first-quarter earnings, exceeding expectations on overall revenue and EPS. However, iPhone sales fell below analyst estimates, and revenue from Greater China was also lower than anticipated.
Despite the lower iPhone revenue, shares in Apple jumped over 3% in pre-market trading following the earnings release. This rally comes after several brokerages, including Jefferies, Loop Capital, and Oppenheimer, had downgraded Apple's stock last week due to concerns about iPhone sales.
For the quarter, Apple reported:
* EPS: $2.40 (beat estimates of $2.35)
* Revenue: $124.3 billion (beat estimates of $124.1 billion)
The iPhone segment generated $69.1 billion, slightly below expectations of $71 billion. This is a decline from the $69.7 billion reported in the same quarter last year.
Greater China sales reached $18.5 billion, falling short of Wall Street's expectations of $21.5 billion. China has been a challenging market for Apple in recent years, with sales declining in both 2023 and 2024.
Despite the decline in iPhone revenue, Apple's Services business generated $26.3 billion, in line with expectations. The company continues to enhance its Apple Intelligence platform, which is expected to be a key feature of the upcoming iPhone 16 line.
Analysts remain cautious about the impact of Apple's AI initiatives, as they may not provide the catalyst for growth that Wall Street had initially hoped for. Apple is also set to introduce several new products, including a new entry-level iPhone SE, iPads, and MacBook Airs.
Over the last 12 months, Apple shares have increased by 24%, similar to Google's performance. Nvidia has outperformed both companies with a surge of 102%. Meta has also seen significant gains, rising by 69%, while Microsoft has lagged behind Big Tech's growth, with only an 8% increase in share value.