As ever, it was the iPhone’s success that really drove Apple’s earnings.
Apple has reported record revenues and done so with success in three key areas, none of which required Apple Intelligence, which analysts insisted the company needed to concentrate on. Here’s how the quarter compares.
Tim Cook has previously said that after an earnings call, he talks a walk across Apple Park to decompress. This time, it’s possible he skipped, because Apple reported earning $94 billion when analysts predicted a possible high of $92.1 billion, but also a possible low of $86.9 billion.
Perhaps those analysts all then went out for a drink together to discuss how they went so wrong. But they’re very rarely perfectly right, and every analysts’ report seen by AppleInsider since the results has had a “yeah, but” tone.
The most extreme is Wedbush, which like all of them says they were right that AI is crucial and Apple should still be doing better, or else. Like a couple of them, it called AI the elephant in the room, but then it went further.
“The AI Revolution is the biggest technology trend in 40 years,” said Wedbush analysts, “and right now Apple is watching this from a park bench drinking lemonade while every other Big Tech company is racing ahead like F1 drivers building out its AI strategy and monetization plan.”
Before the earnings report, it was common for analysts to say that Apple cannot do well in the quarter without a better AI offering. Now it’s that Apple cannot continue to do well without one.
At least they’re consistent.
Although to be fair, TD Cowen has now repeated how it has said before that it believes Apple has 18 months to get back ahead on AI.
Where Apple went right — iPhone
While the overall earnings figure is impressive enough by itself, it’s the breakdown that gives more of an idea about Apple’s future.
Such as with iPhones, where sales were up 13.5% compared to the same time in 2024. That’s the highest quarterly growth in iPhone sales since 2021.
“This strong, broad-based performance was driven by the incredible popularity of the iPhone 16 family,” Tim Cook said during the earnings call, “which was up strong double digits year over year as compared to the 15 family.”
Cook did not dwell, though, on how there is a significant difference between this period in 2025 and the same a year before. The difference is the iPhone 16e, as although it launched in the year’s first quarter, there was no modern equivalent to it at this time in 2024, as the last iPhone SE model was showing its age.
Plus there was the unexpected rise this quarter of sales in China, after years of decline. China’s government helped there by introducing subsidies to stimulate its economy.
Then Apple’s tariff bill came in at $800 million instead of the $900 million Cook had expected.
Where Apple went right — Services
Services ranging from iCloud storage to Apple TV+ were expected to rise because they always do. Services has been a steadily more important contributor to the company’s revenues, but in this quarter there was reason to doubt its success.
That’s because during this quarter, Apple was forced to make changes to its App Store in response to the long-running dispute with Epic Games.
But as Cook reported, Services “revenue for the June quarter was $27.4 billion, up 13% from a year ago, and an all-time record.”
The changes were implemented during the last couple of months, so there hasn’t been a full quarter under the new arrangements yet. Still, it’s possible that Apple’s App Store earnings did take a hit even at this early stage, but it was masked by the overall growth in services.
These new arrangements will presumably continue on for at least the next quarter, if not for the foreseeable future. In which case there will be an impact, but there will never be a mass developer jump from the App Store to third-party alternatives.
Where Apple went right — upgrades
Naturally Apple cherry-picks the most favorable results from its now extraordinarily wide range of products and services. But one where there wasn’t a particularly notable rise in Wearables, there was still reason to raise it — and to consider it a sign for the future.
Specifically, all wearables including the Apple Watch, brought in $7.4 billion. But the key figure was that Apple claimed to have seen “a June quarter record for upgraders to Apple Watch.”
That’s not as good as getting brand-new users, and Apple would have certainly boasted if there had been a significant number of switchers from rival smartwatches. But it does mean that existing users are still engaged enough, still enjoying the device that they keep upgrading to new versions.
So there’s still that demand for Apple Watch. Although it’s likely that there was again an element of buying early to avoid tariff price hikes, too.
Apple plays the long game, and it tends to see that reflected in people switching to its devices, and in customer satisfaction scores leading to device replacements and upgrades.
This time, it also saw it in the much higher than expected revenue report.
Apple isn’t doomed. It may never be in all of our lifetimes. It’s not as if Apple would have collapsed if it had a bad quarter, and even had the earnings been as “terrible” as analysts said that they’d be would still mean billions in profits.
Breaking records now, in a slow part of the year, while facing literally unprecedented tariffs suggests that the company is on the right track.
The F1 track, that is, with no lemonade in sight.
