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Apple Beats Earnings Expectations Despite Sluggish iPhone and China Sales

• Posted on January 31, 2025
• Technology
• By Samiat

Apple Beats Earnings Expectations Despite Sluggish iPhone and China Sales

Key Highlights:

• Apple surpassed Wall Street’s earnings and revenue forecasts but missed expectations for iPhone and Greater China sales.
• Shares rose more than 3% in pre-market trading following the report.
• Apple plans to roll out more AI-driven features and new product launches in the coming months.

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Quarterly Financial Performance:
Apple (AAPL) reported fiscal Q1 earnings after market close on Thursday, exceeding top and bottom-line expectations. However, iPhone revenue and sales from Greater China fell short of forecasts.

• Earnings Per Share (EPS): $2.40, beating analysts’ expectations of $2.35.
• Revenue: $124.3 billion, slightly above the $124.1 billion anticipated.

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Segment Performance:

• iPhone Revenue: $69.1 billion, below estimates of $71 billion and down slightly from $69.7 billion in the prior year.
• Services Revenue: $26.3 billion, in line with Wall Street expectations.
• Greater China Revenue: $18.5 billion, missing forecasts of $21.5 billion.

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Challenges in China:
Apple’s sales in Greater China have been a persistent issue, declining 8% in 2024 to $66.9 billion and 2% in 2023. Contributing factors include a weak renminbi, as well as lower iPhone and iPad demand.

Despite these challenges, Apple retains a significant market presence, though its Q4 iPhone market share fell by 1% to 23%, according to IDC and Canalys, while the broader smartphone market grew 3%.

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AI Push and New Product Releases:
In October, Apple launched its Apple Intelligence initiative, introducing AI-driven features designed to enhance the iPhone user experience and encourage upgrades to its iPhone 16 lineup. However, analysts have expressed concerns that these updates have not provided the anticipated boost to sales.

Apple plans to expand its AI capabilities throughout the year, including functions allowing users to gather information from multiple apps through a single interface.

Additionally, new products are on the horizon, including:

• A new entry-level iPhone SE.
• Updated iPads and MacBook Airs.

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Stock Performance:
Apple shares have climbed 24% over the last 12 months, comparable to Google (GOOG, GOOGL), which rose 27%. Nvidia (NVDA), by comparison, has surged 102%, despite recent concerns over competition from China’s DeepSeek AI platform, which may reduce demand for advanced AI chips.