Apple Quarterly Revenue Report

By Akash Sriram and Aditya Soni

(Reuters) – Apple (NASDAQ:AAPL) is expected to report its biggest quarterly revenue jump in two years on Thursday, driven by iPhone demand performing better than in recent years, especially in China.

The results will provide investors with initial insights into demand for the new iPhone 16 series, released shortly before the end of the company's fiscal fourth quarter.

Executive commentary will be crucial for the fiscal first quarter as concerns arise that the slow rollout of Apple Intelligence features may hinder the anticipated AI-led "super-cycle" for Apple’s flagship product.

As Android rivals like Samsung and software competitors like Microsoft hasten their generative AI efforts, Apple appears to be playing catch-up.

Toni Sacconaghi, an analyst at Bernstein, stated, "The strength of the iPhone 16 cycle is the most important question heading into both the December quarter and FY25." He suggested that while investors may expect optimism about the iPhone 16 and Apple Intelligence, this may not accurately reflect the cycle's ultimate success.

Recently, Apple started a limited rollout of Apple Intelligence features to U.S. customers in English, weeks after the iPhone 16 went on sale. However, these features remain unavailable in major markets including Europe and China, where Apple faces competitive pressure from Huawei and domestic brands like Vivo, Xiaomi, and Honor.

Concerns are growing that consumers may defer holiday purchases until next year, which could delay the expected sales boost from AI.

Analysts estimate that Apple will report a 3.8% increase in iPhone sales during the September quarter, ending two quarters of decline. Overall revenue for the July-September period is anticipated to rise by 5.7%, with Greater China revenue expected to grow by 6.6%. Discounts on certain iPhone models on platforms like Pinduoduo prior to the official release may have contributed to this growth, leading to Apple securing the second-largest share of the Chinese market from July to September, per IDC data.

Sales of iPad are projected to increase by 10.1% to $7.09 billion following a substantial 23.7% rise in the previous three months, bolstered by the launch of more powerful versions of the tablet.

The services sector, encompassing the App Store, is projected to see a 13.3% sales rise, though growth has slowed compared to previous quarters. This unit is facing increased challenges after EU antitrust regulators charged Apple with violating tech regulations in June.

Additionally, scrutiny is mounting on Apple's profitable arrangement with Alphabet (NASDAQ:GOOGL), which designates Google as the default search engine on iOS.

The fourth-quarter results will also reflect a one-time income tax charge of approximately $10 billion, following a decision by Europe’s top court against Apple in September regarding its tax matters in Ireland.