Apple, the world’s most valuable company, shared its financial results on Thursday. The results were mostly in line with Wall Street’s predictions but fell short in two areas: sales in China and iPhone sales.

In the last three months of 2024, Apple reached record earnings and revenue. It made $2.41 per share, slightly higher than the expected $2.35. Its revenue was $124.3 billion, above the $124.26 billion forecast.

However, iPhone sales were $69.1 billion, which was less than the expected $70.7 billion and lower than the same period in 2023. Sales in China also missed expectations, reaching $18.5 billion, below the forecast of $20.9 billion, and showing an 11% decline compared to last year.

Apple’s overall sales grew by 4% compared to the previous year, and net profit grew by 10%. This growth was mainly due to the increase in Apple’s services division, which includes the App Store, AppleCare, and Apple Music. The services unit brought in a record $26.3 billion, a 14% increase from last year.

Before the report, Apple’s stock dropped by 0.7%. After the release, it fell a little more but was still up more than 5% for the week, as Apple benefited from the stock market’s reaction to China’s DeepSeek AI model.

Important Quote

“In the markets where we launched Apple Intelligence, performance was better than in the markets where we didn’t,” said Apple CEO Tim Cook during Thursday’s earnings call. He sees this as a “positive sign” for future iPhone sales, especially as Apple’s AI-ready systems are launched in major countries like China and India. His confidence in iPhones helped Apple’s stock go up by 3% after hours.

Side Note

Apple’s report came a day after three other major American tech companies, worth a trillion dollars each, shared their results, which received mixed reactions from investors. Microsoft’s stock dropped 6% after it didn’t meet expectations for its Azure cloud computing service, marking its biggest loss since 2022. Meta and Tesla’s stocks went up by around 2% each, as Meta surpassed sales and profit expectations and Tesla shared optimistic updates about its upcoming cars, even though they didn’t meet analyst predictions.

Contra

The mixed results show “concern before the earnings report,” according to JPMorgan analysts led by Samik Chatterjee in a recent note to clients. The JPMorgan team listed three worries about the report: a drop in iPhone market share in China, “limited interest” in AI features on iPhones so far, and challenges from foreign exchange as the stronger dollar makes American products more expensive in other countries. China made up 17% of Apple’s revenue in its 2024 fiscal year, which ended in September.

Published: 31th January 2025

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