Apple reported better-than-expected profits for the third quarter of 2024, with buzz about new AI capabilities helping to offset continued declines in key market China.
Despite a decline in iPhone sales compared to the same period a year ago, revenue beat analyst expectations, rising 4.9 percent to $85.78 billion for the three months ended June 29, beating analysts’ average estimate of $84.53 billion. The company kept its cash dividend unchanged at 25 cents a share.
The upbeat report was a bright spot for the tech industry after grim earnings reports from other tech giants including Amazon, Snap and Intel. Shares plummeted Thursday after disappointing earnings reports, including from Intel, which announced plans to cut more than 15,000 jobs as it works to cut billions of dollars in costs to turn around its business. Amazon shares also fell more than 4% on Thursday after the company forecast weaker-than-expected sales this quarter and a continued slowdown in the coming quarter.
Investors were eager to hear an update on Apple’s sales in China, its third-largest market, where the company’s market share has been declining. Earlier this year, Apple fell out of the country’s top five smartphone providers for the first time, being overtaken by local brands such as vivo, OPPO and Huawei. Third-quarter earnings results showed that sales in China fell 6.5% to $14.73 billion, a bigger drop than analysts had expected of a 2.4% decline.
Apple CEO Tim Cook addressed those concerns on a conference call with investors, attributing some of the delays to currency fluctuations. Cook said that holding constant exchange rates, the decline was less than 3% and that iPad sales have returned to growth.
“We remain confident in the long-term business opportunity in China,” he said. “I don’t know what the chapters in this book are going to be, but we remain very confident in the long term.”
Despite struggling sales in China, iPhone sales beat expectations, falling 0.9% to $39.3 billion, a smaller decline than the 2.2% drop analysts had expected. The improvement was partly due to stronger demand ahead of the release of Apple’s new iPhones. artificial intelligence The company announced the feature at its annual developer conference, WWDC, in June.
The tech company’s foray into artificial intelligence includes a range of generative AI tools that will be integrated into the device’s operating system, including a partnership with OpenAI that will be integrated into the Siri voice assistant.
Though these AI features are only available on the iPhone 15 Pro and newer models, analysts say the report marks a strong start. Apple typically launches new devices in September, so analysts will be watching to see how the AI announcement will affect future sales.
“An extremely strong quarter for Apple, validating the company’s transformation to become a leading player in the AI-to-consumer space,” said Thomas Monteiro, senior Apple analyst. Investing.com“These numbers should get even better as AI capabilities hit the market in the coming quarters.”
After newsletter promotion
The company also reported strong growth in iPad sales, which rose 23.7% to $7.16 billion and beat analysts’ expectations of $6.61 billion as the division launched a new AI-focused iPad Pro and larger iPad Air in May to revive demand for the product line that had been sluggish for the past two years.
Revenue from the company’s wearables division, which includes sales of the Apple Watch and AirPods headphones, fell 2.3% to $8.1 billion, compared with analysts’ expectations of $7.79 billion.
Courtesy of Reuters report
