Apple reported strong sales of the iPhone and rebounds in revenue from China, giving it a much needed boost to two parts of the company that have struggled over the past year.
The better performance than expected has reassured Wall Street investors that Apple struggled to maintain pace with its rivals in the artificial intelligence race, and that a key part of its business is stable as it navigates President Donald Trump's looming tariffs. Apple could incur a tariff-related fee of $1.1 billion in the September quarter, CEO Tim Cook said in a call with analysts, which will rise from $800 million this quarter.
The iPhone generated $44.5 billion in revenue for the quarter ended in June, with analysts expecting $40 billion and last year's results of $39.3 billion. Overall revenue was $94 billion in the quarter, up 10% year-on-year.
Sales of IPHONE also grew in China. There, the company has been overwhelmed recently, up from $14.7 billion in the third quarter of 2024 to $15.3 billion in the past quarter.
Apple's shares rose more than 2% in after-hours trading. But that's a much smaller boost than Tech Giants Microsoft and Meta. This was shared by nearly 7%, over 9%, respectively, on Wednesday thanks to AI investments. Apple hasn't performed its rivals badly. Stocks have fallen nearly 15% this year, missing out on big market rally over the past few months.
There was a time when iPhone sales were enough to excite Wall Street. However, analysts pushed Apple CEO Tim Cook about the company's vision of how AI will shape its future products and how it sees the relevance of the iPhone in the AI era.
However, Cook believes that the iPhone remains essential despite AI playing a bigger role in everyday life.
“It's hard to see a world where the iPhone doesn't live in it,” he said in response to a question about how Apple relies more on voice assistants and prepares for fewer scenarios on screen. “That doesn't mean we don't think about anything else either, but I think the device is likely to be a complementary device, not an alternative.”
The iPhone generates more revenue than any other Apple product, making it the most important business in the Wall Street eye. In a call with analysts, Apple CEO Tim Cook said the company set a June quarter record for iPhone sales, up 13% year-on-year.
But Trump's flagellated customs policy requires Apple and other tech giants to rethink how devices such as smartphones and computers are manufactured and shipped. Investors are also hoping Apple will make a big splash on artificial intelligence, as other tech giants like Google, Meta and Microsoft move forward.
Apple shifted production of most of the US-bound iPhones from China to India earlier this year to avoid Trump's tariffs. Smartphones were exempt from China's previous mutual collection, which would have raised the tariff rate to an astounding 145%, but Trump also said they could face 25% tariffs unless companies like Apple and Samsung make smartphones in the US. A temporary trade contract between the two major economies will keep tariffs at 30% until August 12th, but Trump threatened India with a 25% tariff earlier this week.
When asked about how the company handles product assemblies based on fee situation, Cook said there had been no changes since the last quarter.; The “majority” of iPhones sold in the US have India as their country of origin.
He repeated that too It's strong against Apple Its presence in the US, with about 19 billion chips currently coming out of the US.
Beyond tariffs, Apple faces wider challenges for the future of its business. Apple is perceived to be behind artificial intelligence. Artificial intelligence is an important technology that many believe will affect the economy and change the way people work, communicate and find information.
The company would have indefinitely delayed major upgrades to Siri and speeded up alongside the latest AI agents such as Openai's ChatGPT and Google's Gemini. In a call with analysts, Cook said Apple is making “good progress” with the upgraded Siri and is planning to release a new version next year. In the meantime, Apple's AI feature suite includes a variety of features and functions that span across apps, including custom emoji makers, text and the ability to summarise image generators.
“We've also seen a huge increase in investment,” Cook said over the phone. “Apple is always using cutting-edge technology to make it easy to use and accessible for everyone. That's at the heart of Apple Intelligence's AI strategy.”
According to Bloomberg, Apple has lost its major AI researchers to the meta in recent weeks as the social media giant is actively expanding its AI initiative. Cook said the company is repositioning “a considerable number of people to focus on AI.”
“We have a great, great team and we have all the energy behind it,” Cook said.
Apple is also acquiring companies in the AI field. Cook said it bought it. There are seven companies this year, but not all of them are AI-related.
Two analysts at Lightshed Partners made a wave earlier this month when Apple questioned whether Cook should be replaced by a more product-oriented CEO.
“He's a supply chain guy. They need high-tech vision,” Ted Mortonson, managing director and technology sector strategist at Financial Services Company Baird, previously told CNN. “I think they're much more troubled than some people think.”
