Apple sells $46 billion worth of iPhones this summer as artificial intelligence helps end slump

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Apple reversed a recent decline in iPhone sales in the summer quarter, an early sign that its recent efforts to revive demand for its popular product using artificial intelligence are paying off.

According to Apple’s fiscal fourth-quarter report released Thursday, iPhone sales totaled $46.22 billion in the July-September period, up 6% from the same period last year. The improvement reversed two consecutive year-over-year quarterly declines in iPhone sales.

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Increased iPhone sales helped Apple deliver total quarterly revenue and earnings that beat analysts’ forecasts weighing on investors, excluding a one-time $10.2 billion charge related to a recent European Union court ruling that put the Cupertino, Calif.-based company on hold. at a huge expense. for tax arrears.

Apple earned $14.74 billion, or 97 cents per share, down 36% from the same period last year. If not for the one-time tax hit, Apple said it would have earned $1.64 per share, topping the $1.60 per share expected by analysts, according to FactSet Research. Revenue rose 6% year over year to $94.93 billion, about $400 million more than analysts had forecast.

But investors were apparently hoping for an even better quarter. Apple’s share price fell slightly in extended trading following the release of the data.

The results reflect the first few days that consumers have been able to buy the new iPhone 16 lineup, which includes four different models designed to handle various artificial intelligence wizardry that the company bills as “Apple Intelligence.” The branding is part of Apple’s efforts to differentiate its approach to artificial intelligence from competitors such as Samsung and Google, which have already begun incorporating the technology into smartphones.

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Even though the iPhone 16 was specifically designed with artificial intelligence in mind, the technology didn’t become available until Apple released a free software update earlier this week that enabled the first batch of technological tricks, including a feature designed to make it virtual assistant Siri is smarter. , more versatile and colorful. And these improvements are only available in the US for now.

“This is just the beginning of what we think generative AI can do,” Apple CEO Tim Cook told analysts on a conference call Thursday.

Cook said he plans to expand the iPhone’s AI features to other countries in December, as well as release other software updates that will bring even more technology to the iPhone 16 and the two high-end iPhone 15 models, which also feature special computer chips needed to enable the new features. . The December expansion will include the ability to connect to OpenAI’s ChatGPT to take advantage of technologies Apple doesn’t build on its own.

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Investors are betting that as Apple’s AI becomes more widely available, it will encourage hundreds of millions of consumers using older iPhones to upgrade to newer models to get their hands on the latest technology.

While iPhone sales have recovered, another key part of Apple’s business – its services division – is not doing as well as analysts expected amid efforts by regulators in Europe and the US to force the company to allow more payment options in its app store . The measures threaten to undermine a lucrative fee system that allows Apple to exclusively charge commissions of 15% to 30% on many digital commerce transactions made in iPhone apps.

Revenue from Apple’s services division rose 12% year-on-year to nearly $25 billion, but that figure was about $200 million below analysts’ forecasts.

Apple’s revenue also fell slightly year-over-year in China, where the company faces stiffer competition in the smartphone market.

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