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By Stephen Nellis
(Reuters) -Apple executives on Thursday forecast relatively strong sales growth, a sign the company will recover from a dip in iPhone sales as it rolls out artificial intelligence features.
The forecast comes after Apple delivered a slight drop in iPhone revenues for the holiday shopping quarter and lagged Wall Street estimates, hampered by a lack in some markets of artificial intelligence features meant to be the chief selling point of its latest devices.
Apple Chief Executive Tim Cook said those features will reach more users in Europe this spring, and shares rose 3.14% in post-market trade.
Apple has approached AI more cautiously than many of its peers, eschewing the huge data center spending of rivals such as Microsoft and instead envisioning AI as features meant to help sell its latest hardware.
That approach paid off earlier this week when China's DeepSeek unveiled free AI technology that sparked fears of price wars, sank stocks of some of Apple's competitors and sent shares of the iPhone maker up slightly.
Despite the AI rollout stumbles, Apple's overall sales and profits were boosted by stronger-than-expected sales in its fiscal first quarter of iPads and Macs, where new chips helped persuade customers to upgrade.
And Chief Financial Officer Kevan Parekh gave a rosier outlook for the current fiscal second quarter, saying the company expects sales to rise in the low- to mid-single digit range, after accounting for a negative 2.5 percentage point impact from a strong dollar.
"The guidance management provided on the call exceeded expectations, as the iPhone gains momentum and Apple gets past a tough quarter in China," said Gil Luria, managing director at D.A. Davidson.
In the just-ended quarter, iPhone sales dropped slightly to $69.14 billion, compared with the $71.03 billion that analysts were expecting, according to LSEG data. Greater China sales dropped to $18.51 billion, compared with $20.82 billion a year earlier and below the $21.33 billion that a Visible Alpha survey of five analysts expected.
Total sales of $124.30 billion for the fiscal first quarter ended Dec. 28 inched past Wall Street's target of $124.12 billion, according to LSEG, while earnings per share of $2.40 comfortably beat the consensus target of $2.35.
The iPhone maker has positioned AI as a set of new capabilities and features such as drafting emails and transcribing phone calls, but the company is rolling the features out over time and has not yet secured a local partner in China to release them.