Apple Has Watched AI From the Stands Says Dan Ives

Apple Inc. enjoyed a sharp rebound in China during the holiday period, when demand for the new iPhone 17 fueled its first $25 billion quarter in the region since the end of 2021.

The company generated sales of $25.5 billion from its greater China segment during a three-month span that ended Dec. 27. The revenue soared 38%, smashing Wall Street’s average estimate of $21.8 billion and far outpacing total sales growth.  Dan Ives, Global Head of Technology Research at Wedbush Securities joins to discuss on Bloomberg Intelligence.

Apple Inc. delivered record quarterly sales and a better-than-anticipated forecast for the current period, even as the company warned that rising component costs are threatening to squeeze margins.

Revenue will rise 13% to 16% in the second quarter, which runs through March, the company said Thursday during a conference call with analysts. That exceeded the 10% projected by Wall Street — showing that Apple can maintain momentum after an iPhone-fueled sales surge in the December quarter.

Still, the specter of rising memory prices clouded the results. After a minimal effect last quarter, the company expects “more of an impact” to gross margins in the current period, Chief Executive Officer Tim Cook said.

“We do continue to see market pricing for memory increasing significantly,” he said. Apple also said it’s facing unrelated supply chain constraints with the iPhone’s 3-nanometer processor and supplies for its AirPods Pro 3.

The concerns weighed on Apple’s shares. They slipped by as much as 2.4% after markets opened in New York on Friday. The stock had been down 5% this year through Thursday’s close, compared with a 1.8% gain for the S&P 500 Index.

Revenue during the holiday season trounced Wall Street estimates, driven by strong demand for the new iPhone 17, growth in services and a rebound in China.

Sales jumped 16% to $143.8 billion in the period ended Dec. 27. Analysts had estimated $138.4 billion on average, according to data compiled by Bloomberg. Apple’s own projections were for an increase of 10% to 12%.

“IPhone had its best-ever quarter driven by unprecedented demand, with all-time records across every geographic segment,” Cook said in the statement announcing the results.

The results reflected the success of Apple’s latest iPhone, a product line that accounts for roughly half its revenue. Higher-end versions of the device have been especially popular, helping further fuel sales and profit for the company.

But there were weak spots in the quarter, including Apple’s Mac and wearables businesses. The company is also facing concerns about its artificial intelligence push, which is getting an overhaul this year after recent stumbles. And Apple is coping with tariffs, which it said created a $1.4 billion headwind in the holiday period.

The Cupertino, California-based company regained its title as the No. 1 smartphone seller globally in recent months, overtaking Samsung Electronics Co.

“Yet maintaining that dominance is perhaps more uncertain than ever, hinging on the right calls around pricing and developing the next generation of devices, particularly wearables and the anticipated foldable iPhone,” Emarketer analyst Jacob Bourne said in a note.

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