Apple Forecasts Sales Growth Amid AI Expansion and iPhone Recovery

Apple (NASDAQ:AAPL) anticipates solid sales growth as it integrates AI features across its product lineup, helping offset a slight decline in iPhone sales. Despite missing Wall Street’s iPhone revenue estimates for the holiday quarter, Apple’s CEO Tim Cook emphasized that AI-driven features will expand to more users in Europe this spring. Following the announcement, Apple shares rose 3.14% in post-market trading.

Apple’s AI strategy prioritizes enhancing hardware appeal over extensive cloud-based AI investments, unlike rivals such as Microsoft (NASDAQ:MSFT). This cautious approach proved beneficial after China’s DeepSeek launched free AI technology, triggering concerns of price wars and impacting competitor stocks while slightly boosting Apple’s.

In the fiscal first quarter, Apple’s revenue reached $124.30 billion, slightly exceeding analyst expectations of $124.12 billion, with earnings per share at $2.40, outperforming the $2.35 estimate. iPhone sales dropped to $69.14 billion, missing the projected $71.03 billion. Greater China sales fell to $18.51 billion from $20.82 billion a year earlier, largely due to inventory adjustments by resellers.

Mac and iPad sales outperformed expectations, reaching $8.99 billion and $8.09 billion, respectively, as Apple’s new M4 chip fueled demand. The services segment, including iCloud and streaming, surged 13.9% year-over-year to $26.34 billion, surpassing estimates. Wearables revenue, however, missed expectations at $11.75 billion.

Cook stated that AI features, branded as Apple Intelligence, are driving stronger iPhone 16 sales in markets where they have launched. While AI expansion continues in new languages such as French and German, Apple has yet to secure a Chinese partner for local deployment.

Apple CFO Kevan Parekh projected low- to mid-single-digit sales growth in the current quarter, signaling a rebound despite challenges in China.