Apple to Report Q1 Earnings Amid iPhone Sales Concerns, AI Platform Underwhelms
Apple (AAPL) is poised to announce its first-quarter financial results after the closing bell Thursday, drawing investor scrutiny amid skepticism over the effectiveness of its Apple Intelligence platform in boosting iPhone sales.
Both Jefferies and Loop Capital have downgraded Apple's stock in recent days, citing concerns that the company may miss expectations for the December quarter and the upcoming second quarter. According to market research firms IDC and Canalys, Apple's overall iPhone market share declined 1% year-over-year in Q4 to 23%, despite an increase in overall smartphone shipments.
Apple introduced its Apple Intelligence initiative in October, releasing the initial set of updates. The platform was intended to incentivize consumers to upgrade to the latest iPhone 16 models, but analysts question whether it has sparked a surge in purchases. Apple plans to continue releasing Apple Intelligence updates throughout the year, enhancing its functionalities. However, hardware upgrades remain a more tangible selling point for consumers.
Bloomberg consensus estimates project Apple's Q1 earnings per share at $2.35 on revenue of $124.1 billion. This would represent growth from $2.18 per share and $119.5 billion in revenue reported in the same quarter last year. Apple's iPhone segment is expected to contribute $71 billion, up from $69 billion, while Services revenue is anticipated to reach $26 billion, an increase from $23.1 billion. Greater China revenue is projected to surpass $21.5 billion, exceeding $20.8 billion in the previous year.
Apple's presence in China has faced challenges in recent years, with sales declining 8% in 2024 and 2% in 2023. Apple attributed these setbacks to currency fluctuations and weaker demand for iPhones and iPads.
However, Apple is anticipated to release several new products in the coming months, including an entry-level iPhone SE, iPads, and MacBook Airs. These launches are expected to drive revenue growth across its business segments.
Apple's stock has gained 24% over the past 12 months, comparable to Google (GOOG, GOOGL), which has risen 27%. Nvidia (NVDA) has experienced a surge of 102%, despite recent market volatility. Meta (META) has climbed 69%, while Microsoft (MSFT) has lagged behind Big Tech peers with only an 8% increase over the year.