Apple, the tech company behind iPhones and iPads, on Thursday reported a 5% increase in its sales in its third quarter, beating expectations from Wall Street analysts.
The iPhone maker reported third-quarter revenue of $85.78 billion, marking a 5% gain year-over-year. The company's profit also increased 8% to $21.45 billion, exceeding analysts' expectations of $20.65 billion in profit for the quarter.
By products, Apple's revenue growth was boosted by sales of Macs and iPads, earning the company $7.01 billion and $7.16 billion, respectively. The demand for Macs and iPads helped offset weak iPhone sales, which only brought in $39.30 billion in revenue.
This weak demand for the iPhone comes as interest in Apple phones waned in China, with many consumers choosing products from competitor Huawei. iPhone sales in China fell 1% and shipments fell 5%. In comparison, shipments of Huawei products to China jumped by 45% during the June quarter.
Apple Expects a Promising Fourth Quarter
Despite a less-than-stellar performance in the third quarter, Apple expects its iPhone sales to rebound later this year once it releases new phone models featuring generative AI. The system will offer Apple users with writing tools to improve emails, notes, and texts. The tool will be driven by an upgraded Siri and utilize answers from OpenAI's popular chatbot ChatGPT.
"During the quarter, we were excited to announce incredible updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a breakthrough personal intelligence system that puts powerful, private generative AI models at the core of iPhone, iPad, and Mac. We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers' lives, while leading with the values that drive our work," CEO Tim Cook said.
Analysts at Wall Street predict Apple will likely sell more than 90 million iPhone units in the final three months of the year.
"We're on the eve of the new iPhone 16 with A.I. features and everyone is excited," Dan Morgan, a senior portfolio manager at Synovus Trust Company, an investment firm in Georgia that counts Apple among its largest holdings, told the New York Times. "That could create the first catalyst we've seen for iPhone for a while."
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