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Apple CEO Tim Cook said the company’s Apple Intelligence AI tools would “supercharge” the iPhone 16 when he introduced the new device last month. On Thursday, the world got its first glimpse of what Apple’s artificial intelligence technology means for iPhone sales.
iPhone sales for the three months ended in September slightly exceeded analysts’ expectations, according to figures released by the company on Thursday. iPhone sales reached $46.2 billion, up more than 5.5% from the same period a year earlier, according to Apple’s earnings report after the bell.
Here’s why it matters: Apple’s third-quarter results include just over two weeks of sales since iPhone 16 pre-orders opened on September 13. 20.)
While this is only a tiny portion of what will end up being total iPhone 16 sales, it provides an important first look at demand for the device that Apple has been I hope I turn around a sales rut lasting several years. Apple’s overall revenue down year over year for four consecutive quarters last year, in part due to weak iPhone demand and widespread economic uncertainty.
After repeatedly failing to give consumers a compelling reason to upgrade, some analysts believe Apple Intelligencea software upgrade that inserted The artificial intelligence features found in the iPhone 16 could spur a sales “supercycle” that the company craves.
Apple’s third-quarter iPhone sales figure also includes sales of earlier iPhone models that occurred during the quarter, but indicates that the iPhone 16 helped increase sales slightly. In the quarter last year when the iPhone 15 was launched, iPhone sales grew about 2.8% year over year.
Improving iPhone sales growth helped push the company’s overall sales up 6% year over year to $94.9 billion, slightly more than even analysts predicted. if profits fell 35% from the year-ago quarter.
During Thursday’s earnings call, Cook said the Apple Intelligence update was already compelling for consumers.
“(iOS) 18.1 has twice the adoption rate of (iOS) 17.1,” Cook said. “So that clearly shows a level of interest.”
Apple shares (AAPL) plunged about 1% after-hours trading after the report.
Results come after Apple this week deployed the first Apple Intelligence features on the iPhone 16, as well as the iPhone 15 Pro models, including new writing tools and the ability to record, transcribe and summarize calls. This means that people who purchased the iPhone 16 in the first month it was on sale didn’t have access to these AI features until recently.
The slow arrival of new capabilities and features – more Apple Intelligence offerings are expected to drop with iOS 18.2 in December – may mean Apple fans haven’t felt a huge sense of urgency to upgrade to the iPhone 16 .
Ahead of Thursday’s report, Wall Street investors were intently focused on “early indications of the iPhone 16 cycle’s performance,” as well as the company’s fourth-quarter sales forecast, a said CFRA Research analyst Angelo Zino in a research note ahead of the report’s release. report.
In a statement released Thursday, Cook said Apple Intelligence “sets a new standard for AI privacy and supercharges our lineup heading into the holiday season.”
Investors were also watching sales figures in China, one of Apple’s most important markets. The iPhone maker slashed prices in China earlier this year amid fierce competition from local rivals, but analysts hope the iPhone 16 could help spark a rebound, despite some obstacles to the deployment of Apple Intelligence features in the region.
Third-quarter sales in China were almost flat with a year earlier at just over $15 billion, but fell short of the $16.1 billion analysts had hoped for, according to Refinitiv consensus estimates. .
Most analysts said before the report’s release that they weren’t too concerned if the September sales numbers weren’t encouraging. Instead, the most important quarter – as always for Apple – will be the current holiday quarter.
Wedbush analyst Dan Ives said in a recent note to investors that he estimates there are about 300 million iPhones worldwide that haven’t been upgraded in more than four years, adding that “a monster holiday season (is) likely.”
And following Thursday’s report, Emarketer analyst Jacob Bourne said that “The staggered rollout of Apple Intelligence could dampen some of the momentum in the device upgrade cycle, but the combination of strong services revenue growth and healthy demand for iPhone 16 positions Apple in good position for the festive period.”
CNN’s Ramishah Maruf contributed to this report.
