Apple executives have projected strong sales growth, signaling a recovery from a slight dip in iPhone revenue as the company expands its artificial intelligence (AI) features globally.
Despite iPhone sales falling to $69.14 billion in the holiday quarter—below analyst expectations of $71.03 billion—CEO Tim Cook emphasized that AI-powered Apple Intelligence features are driving demand in regions where they have launched. The company plans to expand these features to Europe this spring, although a China launch remains uncertain.
Apple’s cautious AI approach contrasts with competitors like Microsoft, which have invested heavily in AI infrastructure. However, the strategy has helped boost hardware sales, particularly in Mac and iPad segments, where the introduction of M4 chips has driven upgrades. Mac sales reached $8.99 billion, while iPads generated $8.09 billion, both exceeding forecasts.
Meanwhile, Apple’s services business, including iCloud, Apple Music, and streaming, surged 13.9% year-over-year to $26.34 billion, providing a crucial revenue buffer. However, its wearables segment, which includes the Apple Watch and AirPods, slightly missed expectations, reporting $11.75 billion in sales versus a projected $12.01 billion.
Looking ahead, Apple expects low to mid-single-digit sales growth in its fiscal second quarter, despite currency fluctuations. Analysts believe the company’s AI expansion and strong ecosystem will help offset its challenges, particularly in the Chinese market.