Apple closed last year with its strongest iPhone sales on record, driven by demand for the new iPhone 17 range, even as other parts of the business struggled to keep pace. The company said iPhone sales surged in the final three months of the year, helping push overall revenue up 16 percent to $144bn £82.5bn, the fastest growth Apple has recorded since 2021.
The gains were fuelled by strong performance across multiple regions. Apple reported a sharp jump in sales in China alongside solid growth in Europe, the Americas and Japan. India also stood out, with Tim Cook saying sales there reached a quarterly record. Demand was so strong, he told analysts, that Apple is now racing to keep up.
“To meet a very high level of customer demand, we’re currently constrained,” Cook said. He added that demand for the iPhone 17 “exceeded our expectations, to say the least,” putting the company into what he described as “supply chase mode.”
Not every division shared in the success. Sales of wearables and accessories, including the Apple Watch and AirPods, fell by about 3 percent, while Mac sales dropped by just over 7 percent. The contrast underlined how heavily Apple’s recent growth still relies on the iPhone, even as it looks to expand services and new technologies.
Attention is also turning to Apple’s next move on artificial intelligence. Cook declined to give details about a newly announced partnership with Google, which will see Google’s Gemini technology underpin future Apple AI models and upgrades to Siri. Investors are watching closely. “Where investors are really wondering about what Apple is going to do next is on AI because they have hung back more than some of the other big tech names,” said Anna MacDonald, an investment manager at Aubrey. She added that Apple’s traditionally polished user experience could explain its caution, noting that the current “stumbling” responses of ChatGPt feel “very un-Apple-like.”
Others warn Apple’s grip on the smartphone market is no longer guaranteed. Jacob Bourne of Emarketer said the company must fully capitalise on its Gemini partnership. “It has to make the most of its Google Gemini partnership to deliver Siri upgrades that make consumer voice AI relevant, seamless, and monetisible,” he said.
Apple’s approach contrasts sharply with rivals pouring money into AI. The company plans to spend $16bn in the coming financial year on expanding its business, including retail stores and infrastructure. That is modest compared with Microsoft, which spent more than $37bn in a single quarter largely on AI projects. Investor nerves around that spending were clear this week when Microsoft shares fell 10 percent in one day, their biggest drop since 2020.
Author: Kieran Seymour