Apple posted stronger-than-expected third-quarter earnings Thursday as the tech giant prepares to launch a host of AI-theme initiatives heading into the release of its iPhone 16 later this fall.
Apple (AAPL) said earnings for the three months ending in June, its fiscal third quarter, rose 11.1% from last year to $1.40 per share, firmly topping the Street consensus forecast of $1.35 per share. Group revenues, Apple said, rose 4.9% from last year to $85.8 billion, a June quarter record that again topped analysts' estimates of an $84.36 billion tally.
Apple said iPhone revenues slipped 1% from last year to $39.3 billion, topping Street forecasts, while China sales were down 6.5% to $14.73 billion.
Revenues from Apple's key services business, which includes Apple Pay, iCloud and Apple TV, rose 1% to $24.21 billion, narrowly ahead of the $23.97 billion forecast.
Apple reports quarterly sales and earnings
“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," Apple CEO Tim Cook said.
"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,” he added.
Related: Analysts adjust Apple stock price target ahead of earnings
Hardware sales were mixed: Mac sales rose 2.5% from last year to $7.01 billion, Apple said, and iPad sales were up 24% to $7.16 billion. Wearables sales, which includes the AppleWatch, fell 2.2% to $8.1 billion.
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Apple shares were marked 0.37% lower in after-hours trading immediately following the earnings release, indicating a Friday opening bell price of $217.55 each.
“During the quarter, our record business performance generated EPS growth of 11% and nearly $29 billion in operating cash flow, allowing us to return over $32 billion to shareholders,” said CFO Luca Maestri.
“We are also very pleased that our installed base of active devices reached a new all-time high in all geographic segments, thanks to very high levels of customer satisfaction and loyalty,” Maestri said.
Related: Apple at record high as analysts revamp stock price targets
Apple, which regained its title as the world's most-valuable stock from Microsoft (MSFT) and now trades with a $3.31 trillion market cap, unveiled its AI ambitions in Cupertino, California, earlier this month.
The gala event included a major reboot of its Siri digital assistant and a series of new features for its hardware base that it dubs "Apple Intelligence".
Big picture, we're marking time until we see what the iPhone does in December. This quarter and most of the September quarter does'nt matter. All that matters is what FY25 and FY26 look like. The Street expects FY24 to up 1.5%, FY25 up 7.4% and FY26 up 6.1%.
— Gene Munster (@munster_gene) August 1, 2024
Apple's strategy is to integrate a host of AI-powered tasks, such as summarization, text generation, photo editing, and enhanced search, into its ecosystem of iPhones, iMacs, and iPads.
Analysts see this effort as the best and fastest way to drive consumer adoption of the newly developed technology, and it will be a key focus of the tech giant's earnings call.
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