Apple Posts Most Profitable Quarter Ever as iPhone Sales Surge
Apple has announced its most profitable quarter in history, driven by record-breaking iPhone sales that surged due to new, higher-priced models, robust holiday shopping, and a significant rebound in the Chinese market. The company's financial results for the three months ending in December showcase a remarkable performance, with profit and revenue reaching unprecedented levels.
Record Financial Performance
Profit for the quarter rose by 16 percent from the previous year, reaching an impressive $42.1 billion. Revenue also set a new record, increasing by nearly 16 percent to $143.8 billion, marking the largest quarterly growth since 2021. This surge was primarily fueled by iPhone revenue, which jumped 23 percent to $85.3 billion compared to the same period last year.
Factors Behind the iPhone Success
The introduction of redesigned iPhones in September, including the thin iPhone Air and the overhauled iPhone Pro with a raised back bump, played a crucial role in attracting consumers. Apple also raised prices on some models by $100, which, combined with strong holiday spending, contributed to the sales boost. Tim Cook, Apple's CEO, noted in a call with analysts that the "staggering level of demand" has led to low inventory, making it difficult to predict when supply and demand will balance.
Rebound in China Market
Apple experienced a sharp rebound in China, the world's largest smartphone market, after years of weak sales. According to Counterpoint Research, iPhones accounted for 22 percent of smartphone shipments in China during the quarter, surpassing all competitors, including local rivals. Sales in China soared by 38 percent to $25.5 billion, with Kevan Parekh, Apple's chief financial officer, expressing excitement over the product design and features resonating with Chinese consumers, exceeding expectations.
Exceeding Wall Street Predictions
Apple's results outperformed Wall Street's forecasts, with analysts having anticipated quarterly revenue of $138.38 billion and profit of $39.49 billion. Following the announcement, Apple's share price rose by as much as 2 percent in after-hours trading, reflecting investor confidence in the company's performance.
Challenges and Other Business Segments
Despite the success, Apple faces challenges, including lagging behind in the artificial intelligence race compared to rivals investing heavily in AI development. The company has adopted a slower approach, partnering with other firms like Google to enhance AI features such as Siri. Additionally, Apple has managed to avoid the effects of a global memory chip shortage, though analysts warn that higher costs could impact later this year due to long-term supplier contracts.
In other business areas, Apple reported mixed results. Revenue from services, including the App Store and Apple Music, increased by nearly 14 percent to $30 billion. iPad sales rose 6 percent to nearly $8.6 billion, while wearables and Macs experienced slower sales growth. The company also continues to navigate trade policies, expecting to pay about $1.4 billion in tariffs for the quarter, aligning with earlier projections.
