TLDR
- Apple posted Q1 revenue of $143.8 billion, up 16% year-over-year, beating Wall Street estimates by over $5 billion
- iPhone sales jumped 23% to $85.27 billion as iPhone 17 models drove record demand across all regions
- China sales exploded 38% to $25.53 billion, far exceeding the $21.32 billion analyst forecast
- Company projects 13-16% revenue growth for March quarter despite chip supply constraints
- Wearables revenue of $11.49 billion missed targets due to higher-than-expected AirPods Pro 3 demand
Apple delivered a blowout fiscal first quarter. Revenue hit $143.8 billion, crushing analyst expectations of $138.48 billion.
Apple $AAPL Earnings…
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Earnings per share reached $2.84, well above the $2.67 consensus. Net income came in at $42.1 billion.
The iPhone 17 lineup powered the results. CEO Tim Cook described demand as “staggering” in interviews following the report.
Apple Inc., AAPL
iPhone revenue soared 23% to $85.27 billion. Analysts had expected just $78.65 billion.
Apple set sales records in every geographic region. The company now has 2.5 billion active devices, up from 2.35 billion last year.
China Sales Explode Past Forecasts
Greater China delivered the quarter’s biggest surprise. Sales surged 38% to $25.53 billion.
That crushed estimates of $21.32 billion. The region includes mainland China, Taiwan, and Hong Kong.
Cook said the performance exceeded internal expectations. The iPhone 17 drove record upgrades and double-digit Android switcher growth.
“We set an all-time record for upgraders in mainland China,” Cook told analysts. Market share gains over Android helped fuel the surge.
Supply Issues Cloud Outlook
Apple forecast March quarter revenue growth of 13% to 16%. That’s above analyst estimates of 10% growth.
The company expects revenue between $107.8 billion and $110.66 billion. Analysts projected $104.84 billion.
Supply constraints will limit iPhone production. “We’re currently constrained,” Cook said on the earnings call.
Taiwan’s TSMC makes Apple’s chips and is facing capacity issues. Memory chip shortages add another challenge.
A global DRAM shortage has hit the electronics industry. Samsung and SK Hynix control two-thirds of the market and warned of worsening shortages.
Production has shifted toward AI applications. Data center memory commands higher margins than smartphone memory.
Cook declined to discuss potential price increases. He said the company would “look at a range of options” for dealing with rising memory costs.
Apple forecast gross margins of 48% to 49% for the March quarter. Memory chip costs will have “a bit more of an impact” on margins, Cook noted.
Product Line Performance
Mac revenue missed estimates at $8.39 billion. Sales fell 7% from last year despite the November launch of MacBook Pro with M4 chip.
iPad revenue beat expectations at $8.60 billion. Sales grew 6% as half of buyers were new to the product.
Wearables revenue came in at $11.49 billion, below the $12.04 billion estimate. Demand for AirPods Pro 3 translation features caught Apple off guard.
Services revenue reached $30.01 billion, just under estimates. The segment grew 14% from last year.
Apple TV viewership jumped 36% in December. The company expects similar Services growth rates in the current quarter.
Apple announced a Google partnership earlier this month to use Gemini for Siri improvements. The company also acquired AI startup Q.ai for $1.6 billion.
Finance chief Kevan Parekh said AI requires “incremental investment” beyond normal product development. Research and development spending rose to $10.89 billion from $8.27 billion last year.
Apple spent nearly $32 billion on share repurchases and dividends during the quarter.
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Source: https://blockonomi.com/apple-aapl-stock-iphone-17-fuels-record-quarter-with-38-china-sales-jump/