Apple Posts Record Quarter on iPhone Surge, but Investors Eye Rising Costs

Apple reported a historic quarter, with revenue soaring to $143.8 billion on the back of what CEO Tim Cook called 'simply staggering' iPhone demand. Earnings per share reached $2.84, comfortably beating forecasts. The star performer was the iPhone, which generated $85.3 billion in sales, a 23% jump. The company's services business also set a new record at $30 billion. A remarkable 38% sales increase in Greater China, reaching $25.53 billion, signaled a strong rebound in a critical market. Apple's active device base grew to over 2.5 billion.

Despite these results, Apple's stock saw only a modest rise in after-hours trading. The muted reaction stems from concerns outlined in the company's guidance. Chief Financial Officer Kevan Parekh pointed to significantly rising memory costs, driven by industry-wide demand, which are expected to pressure margins in the coming months. The company also faces supply constraints for advanced chips used in its latest iPhones.

Cook dedicated substantial time to Apple's artificial intelligence strategy, noting that a majority of eligible users have adopted Apple Intelligence features. A partnership with Google to integrate Gemini models into an enhanced Siri is scheduled for spring 2026. However, some analysts question whether Apple's spending on AI can keep pace with rivals and how it will translate into new profits beyond hardware sales.

The quarter demonstrated the enduring strength of Apple's brand and ecosystem. Yet, with a forward price-to-earnings ratio of 31, investors are waiting to see if Apple can navigate cost pressures and deliver a clear, profitable AI roadmap in the year ahead.

Source: Webpronews