Apple Reports Soft iPhone Sales In Holiday Quarter, But Still Tops Wall Street Forecasts

Apple reported soft sales of its flagship iPhone during the holiday quarter, but still managed to top Wall Street forecasts for revenue and earnings per share.

Revenue inched up 4% year-over-year in the period ended December 31 (the company’s first quarter of fiscal 2025), reaching $124.3 billion. The revenue figure was a hair better than Wall Street analysts’ consensus estimate, but earnings per share of $2.40, well ahead of consensus.

Product revenue increased 1.6% to a shade less than $98 billion, reflecting sluggish sales of the iPhone as well as in China. Services revenue climbed 14% to $26.3 billion.

Sales of the iPhone 16 have not been as robust as Apple or its investors had hoped since the device was introduced in September 2024. The category-defining handset still accounts for roughly half of the company’s revenue. The rollout of a new version of the cheaper SE model of the iPhone, seen as a way to encourage more frequent upgrades and possibly new AI featured, has been delayed and is still not planned on a specific date.

Apple came into Thursday’s earnings report as the most valuable company in the world, with a market cap of $3.6 trillion, though that ranking is constantly evolving. Compared with many of its Big Tech peers, Apple is not spending as much on AI infrastructure, though it has been emphasizing its Apple Intelligence capability as a device enhancement. Because of this comparatively asset-light strategy, the company held up better than some others when China’s DeepSeek made waves for its lower-cost advancements in AI this month. CEO Tim Cook remains bullish about the potential for the company’s nascent AI efforts.

“Through the power of Apple silicon, we’re unlocking new possibilities for our users with Apple Intelligence, which makes apps and experiences even better and more personal,” Cook said in the company’s earnings release.

“Our record revenue and strong operating margins drove EPS to a new all-time record with double-digit growth and allowed us to return over $30 billion to shareholders,” CFO Kevan Parekh said. “We are also pleased that our installed base of active devices has reached a new all-time high across all products and geographic segments.”