Apple’s iPhone sales surge to new quarterly high despite early missteps in artificial intelligence

By MICHAEL LIEDTKE The Related Press

Apple’s iPhone gross sales rose to a brand new quarterly file over the vacations, regardless of synthetic intelligence blunders that prompted the tech trendsetter to get a serving to hand from Google.

The October-December outcomes introduced Thursday replicate the loyalty of Apple’s followers, who eagerly snapped up the software program latest iPhone 17 models though the corporate nonetheless hasn’t delivered on its promise 2024 promise to enhance the gadget’s Siri help with AI.

Apple tried to compensate for its AI errors with it a new ‘liquid glass’ design for iPhone 17 and older fashions put in by way of a free software program improve launched final September. That components resulted in iPhone gross sales of $85.3 billion, a rise of 23% in comparison with the identical interval final 12 months. It marked Apple’s highest iPhone gross sales over a three-month interval because the gadget’s debut in 2007.

“Demand for the iPhone has merely been staggering,” Apple CEO Tim Prepare dinner crowed on a convention name with an analyst, predicting the gadget will turn into a sophisticated platform for AI.

The iPhone’s strong efficiency propelled Apple to a revenue of $42.1 billion, or $2.84 per share for the quarter, up 16% from the prior 12 months. Complete income additionally rose 16% from the earlier 12 months to $143.8 billion. Each revenue and income exceeded investor analyst expectations.

Shares of Apple rose about 1% in prolonged buying and selling after the numbers got here out. However the share value remains to be barely decrease to this point this 12 months, and never a lot larger than the place it ended on the finish of 2024.

Zacks Funding Analysis analyst Ethan Feller mentioned considerations about Apple’s late begin in AI appeared overblown and it now seems well-positioned to roll out extra of the know-how “as a characteristic that scales naturally throughout the ecosystem,” which incorporates iPads, Mac computer systems and smartwatches along with iPhones. Apple mentioned it now has greater than 2.5 billion lively units operating its numerous working methods worldwide.

The Cupertino, California-based firm will attempt to hold the momentum going by lastly releasing a collection of delayed AI options, together with a Siri improve that ought to make the assistant extra chatty and versatile.

To make it occur, Apple is using Google’s latest AI model, Gemini 3, in a tacit admission of its personal shortcomings in a know-how extensively considered the business’s greatest breakthrough because the introduction of the iPhone.

Regardless of its AI shortcomings, the iPhone completed final 12 months as the worldwide gross sales chief with a market share of almost 20%, simply above Samsung, in line with analysis agency Worldwide Knowledge Corp.

In a present of confidence, Apple forecast that gross sales for the January-March interval will rise a minimum of 13% from final 12 months, above the roughly 10% improve that analysts had anticipated.

The AI ​​growth is confronting Apple with one other problem: a scarcity of reminiscence chips for smartphones and laptops, amid voracious demand for a similar processors within the huge knowledge facilities being constructed to energy AI capabilities.

In addition to threatening to curtail iPhone manufacturing, the reminiscence chip disaster can be driving up their costs – an element that has already eroded Apple’s revenue margins. That monetary strain may finally push Apple to boost the costs of iPhones and different merchandise to assist offset rising reminiscence chip prices

“We proceed to see market costs for reminiscence improve considerably,” Prepare dinner instructed analysts Thursday. “As all the time, we’ll have a look at a spread of choices to take care of this.”