Apple reported a smaller than expected decline in quarterly revenue and announced plans to return to sales growth in the current quarter by investing in AI features to be unveiled in the coming months. The company increased its cash dividend by 4% and authorized a program to buy back $110 billion of its stock, the largest in its history. Shares of Apple surged roughly 7% in extended trade following the announcement.
Despite stiff competition and regulatory challenges, Apple’s results suggest that it may be regaining its footing in the smartphone market. The company’s performance has underperformed compared to other Big Tech companies, with shares falling 10% this year due to weak iPhone demand and competition in China. For the fiscal second quarter, Apple reported revenue of $90.8 billion, exceeding analyst estimates of $90.01 billion.
Apple expects low-single-digit growth in overall revenue for the current quarter, ending in June. Wall Street estimates a 1.33% revenue growth to $82.89 billion. The company faces challenges from smartphone rivals introducing AI chatbots and regulatory issues in Europe and the United States, with the Department of Justice accusing Apple of monopolizing the smartphone market and raising prices.
iPhone sales for the fiscal second quarter fell 10.5% to $45.96 billion, slightly below analyst expectations of $46 billion. In contrast, iPhone sales were up slightly excluding a one-time surge in sales from the previous year due to supply chain disruptions during the pandemic. Apple’s revenue decline in China was not as steep as expected, with Greater China sales of $16.37 billion, down 8.1% but above analyst expectations.
Apple has been relatively quiet about its plans for artificial intelligence, a technology in which competitors like Microsoft and Google are heavily invested. The company has increased research and development spending, investing over $100 billion in the past five years. Apple’s quarterly earnings per share were $1.53, above Wall Street estimates of $1.50. Sales in the services segment, which includes Apple Music and TV offerings, rose to $23.87 billion, exceeding analyst expectations.
Mac sales grew to $7.5 billion in the fiscal second quarter, compared to estimates of $6.86 billion, driven by the strength of the new MacBook Air powered by the M3 chip. iPad sales declined to $5.56 billion, below analyst expectations. In the wearables segment, which includes Apple Watches and AirPods, sales fell to $7.91 billion, compared to analyst estimates of $8.08 billion. Apple’s CEO, Tim Cook, expressed optimism about the company’s opportunity in generative AI and promised exciting announcements for customers later in the year.
