Apple on Thursday reported a slower-than-expected quarterly revenue decline, and Chief Executive Officer Tim Cook told Reuters that investments in AI capabilities to be announced in the coming months will lead to stronger growth now. He said he expects sales growth to pick up in the quarter.
Apple said its fiscal second quarter revenue fell 4% to $90.8 billion, beating analysts’ average estimate of $90.01 billion, according to LSEG data.
Cook told Reuters that for Apple’s current quarter, which ends in June, the iPhone maker’s overall sales are expected to grow “in the low single digits.”
Wall Street expects sales to rise 1.33% to $82.89 billion, according to LSEG data.
Apple faces many challenges across its business.
Smartphone rivals such as Samsung Electronics Co. are introducing competing devices aimed at hosting artificially intelligent chatbots.
On the regulatory front, Apple’s services business, including its lucrative App Store, was one of the few growth areas in the second quarter and is under pressure from new European laws.
In March, the U.S. Department of Justice accused Apple of monopolizing the smartphone market and jacking up prices.
iPhone sales for the fiscal second quarter fell 10.5% to $45.96 billion, compared to analysts’ expectations of $46 billion.
Apple executives said in February that the company benefited from a $5 billion increase in iPhone sales in the second quarter of last year’s fiscal year as the company bounced back from supply chain disruptions during pandemic lockdowns.
Outside of that one-time phenomenon, iPhone sales were down only slightly, as the Cupertino, Calif., company’s flagship product faces stiff competition.
Huawei Technologies is gaining market share in China.
Cook said iPhone sales are still “growing in some markets, including China.”
However, Apple’s sales decline in China was not as steep as analysts expected, with Greater China sales of 16.3 billion in the fiscal second quarter ended March 30, according to data from Visible Alpha. 70 million, a decrease of 8.1%, exceeding analysts’ expectations of $15.59 billion.
Apple has said little about its product plans for artificial intelligence technology, in which rivals Microsoft and Alphabet Inc.’s Google are making huge bets.
The company started increasing its research and development spending last year, and Cook said it has spent more than $100 billion on research and development over the past five years.
“We remain very bullish on the opportunity in generative AI and are making significant investments,” he said. “We look forward to sharing some very exciting things with our customers” at an event later this year, Cook said.
Apple’s quarterly earnings per share were $1.53, beating Wall Street expectations of $1.50, according to LSEG data.
