delivered strong performance in its holiday quarter, posting gains in global iPhone sales and its China business while boosting its already notable profit margins and reporting over 2.5 billion active Apple devices worldwide.
This highlighted CEO Tim Cook’s unmatched ability to manage the operations that keep the $3.8 trillion company running smoothly.
But it also underscored the challenges Apple faces and the limits of its leadership in a shifting market. Apple proved once again it excels at designing, manufacturing, and selling hardware better than any other company globally—especially when supply chains are strained. Yet when it comes to an AI vision, Apple and Cook had surprisingly little to share.
Outcome: Even with the stellar quarter, Apple’s stock struggled, rising just 0.2% in after-hours trading.
Starting with the good news, Apple’s fiscal first-quarter results were exceptional. Revenue hit $143.8 billion, a 16% year-over-year increase and well above the $138.5 billion analysts expected. Net income rose 16% to $42.1 billion, or $2.84 per share—surpassing the $2.67 per share analysts projected.
The report’s standouts were iPhone sales (up 23% year-over-year thanks to the new iPhone 17) and Apple’s Greater China business, which soared 38% to $25.5 billion. Cook noted foot traffic at Apple’s Chinese retail stores rose by double digits from the prior year, while iPhone sales in China logged their best quarter ever.
The iPhone 17 lineup’s launch has clearly reinvigorated a business that had begun to slow—iPhone sales growth averaged just 4.2% over the previous six quarters. But Cook said demand is now so strong that Apple is constrained by its ability to secure enough advanced 3-nanometer chips powering the phones.
Tim Cook is, of course, a supply chain master. Before replacing Steve Jobs as CEO, he served as Apple’s long-time COO, overseeing the vast network of partners and suppliers underpinning its products. That expertise was on display Thursday, with Apple forecasting 13%–16% overall sales growth for the current quarter and strong gross profit margins of 48%–49% of revenue.
One analyst on the earnings call said he was “shocked” by Apple’s projected gross margins. After all, the analyst noted, memory chip prices for Apple products are currently sky-high and supply is severely constrained—since the chips are also in high demand for AI data centers.
Still a cipher on AI
Amid market uncertainty (including wildcards like tariffs), Cook and his team make a strong case the business is well-managed. If only the company’s AI plan were as reassuring.
When asked about plans to partner with [firm] for AI capabilities in Siri, the timeline for AI return on investment, and other AI updates, Apple executives gave scripted non-answers.
“We’re bringing intelligence to more of what people love, integrating it across the operating system in a personal and private way—and that creates great value,” Cook said.
When queried about how many of Apple’s installed users have phones powerful enough to run the advanced AI Siri launching later this year, CFO Kevan Parekh replied: “We can’t tell you, but it’s ‘growing.’”
To be clear, many companies are tight-lipped about product and strategy. Google is famous for dodging questions with platitudes on its calls. The problem for Apple is its AI efforts to date have been filled with embarrassing missteps and delays. The company promised advanced AI features two years ago but has yet to deliver anything of note. Its recent deal to use Google’s Gemini for the next Siri was widely seen as an admission of struggles developing its own in-house AI models.
Apple’s iPhone business is thriving again—but it’s entirely unclear what Apple will have to offer when this growth fades.