Apple’s Record iPhone Sales Amid AI Challenges
Apple achieved record iPhone sales during the holiday season, even with some bumps related to artificial intelligence that nudged the company to seek Google’s assistance.
The results for October through December, released on Thursday, showcase the loyalty of Apple’s customer base, who eagerly purchased the new iPhone 17 models despite the company’s failure to enhance Siri with AI as promised for 2024.
In an effort to address its AI missteps, Apple introduced a new “liquid glass” design for the iPhone 17, along with free software upgrades for older models released last September. This approach propelled iPhone sales to $85.3 billion, marking a 23% rise from the previous year. It represents Apple’s best quarterly sales of iPhones since the device launched in 2007.
Apple CEO Tim Cook expressed excitement over the staggering demand for the iPhone during a conference call with analysts, predicting that the device will evolve into a leading platform for AI.
This strong performance helped Apple achieve a profit of $42.1 billion, or $2.84 per share for the quarter, reflecting a 16% increase year-over-year. Total revenue also climbed 16% to $143.8 billion, surpassing analyst expectations.
Following the announcement, Apple’s shares increased by about 1% in after-hours trading. However, stock prices remain slightly lower year-to-date and are only marginally above where they closed at the end of 2024.
Analyst Ethan Feller from Zacks Investment Research commented that concerns about Apple’s late entry into AI were likely exaggerated and suggested that the company is well positioned to integrate more AI features across its ecosystem, which includes iPads, Macs, and smartwatches. Apple reported that over 2.5 billion active devices worldwide are using its various operating systems.
To maintain this momentum, Apple plans to finally release a series of postponed AI features, notably an upgrade for Siri aimed at making the assistant more engaging and functional.
To achieve this, Apple is utilizing Google’s latest AI model, Gemini 3, indicating a recognition of its own limitations in a technology deemed as a significant advancement since the iPhone.
Despite its AI shortcomings, the iPhone concluded last year as the leader in global sales, boasting nearly a 20% market share, positioning it just ahead of Samsung, according to the research firm International Data Corp.
In a show of confidence, Apple projected that its revenue for the January-March quarter would rise by at least 13% from the previous year, exceeding the analysts’ anticipated 10% increase.
However, the current AI surge presents another challenge for Apple—a memory chip shortage for smartphones and laptops stemming from high demand for the same chips in new data centers designed for AI functionalities.
This chip scarcity threatens to limit iPhone production while also driving up costs, which could further squeeze Apple’s profit margins. Such financial pressures may eventually lead the company to adjust prices on iPhones and other products to cope with rising memory chip expenses.
“We continue to see significant increases in market pricing for memory,” Cook told analysts. “As always, we’ll look at a range of options to address that.”
