Apple’s iPhone sales rose to a new quarterly record over the holidays, despite artificial intelligence blunders that prompted the tech trendsetter to get a helping hand from Google.
The October-December results announced Thursday reflect the loyalty of Apple’s fans, who eagerly snapped up the software latest iPhone 17 models even though the company still hasn’t delivered on its promise 2024 promise to improve the device’s Siri support with AI.
Apple tried to compensate for its AI mistakes with it a new ‘liquid glass’ design for iPhone 17 and older models installed via a free software upgrade released last September. That formula resulted in iPhone sales of $85.3 billion, an increase of 23% compared to the same period last year. It marked Apple’s highest iPhone sales over a three-month period since the device’s debut in 2007.
“Demand for the iPhone has simply been staggering,” Apple CEO Tim Cook crowed on a conference call with an analyst, predicting the device will become an advanced platform for AI.
The iPhone’s robust performance propelled Apple to a profit of $42.1 billion, or $2.84 per share for the quarter, up 16% from the prior year. Total revenue also rose 16% from the previous year to $143.8 billion. Both profit and revenue exceeded investor analyst expectations.
Shares of Apple rose about 1% in extended trading after the numbers came out. But the share price is still slightly lower so far this year, and not much higher than where it ended at the end of 2024.
Zacks Investment Research analyst Ethan Feller said concerns about Apple’s late start in AI seemed overblown and it now appears well-positioned to roll out more of the technology “as a feature that scales naturally across the ecosystem,” which includes iPads, Mac computers and smartwatches in addition to iPhones. Apple said it now has more than 2.5 billion active devices running its various operating systems worldwide.
The Cupertino, California-based company will try to keep the momentum going by finally releasing a series of delayed AI features, including a Siri upgrade that should make the assistant more chatty and versatile.
To make it happen, Apple is using Google’s latest AI model, Gemini 3, in a tacit admission of its own shortcomings in a technology widely regarded as the industry’s biggest breakthrough since the introduction of the iPhone.
Despite its AI shortcomings, the iPhone finished last year as the global sales leader with a market share of nearly 20%, just above Samsung, according to research firm International Data Corp.
In a show of confidence, Apple forecast that sales for the January-March period will rise at least 13% from last year, above the roughly 10% increase that analysts had expected.
The AI boom is confronting Apple with another challenge: a shortage of memory chips for smartphones and laptops, amid voracious demand for the same processors in the massive data centers being built to power AI functions.
Besides threatening to curtail iPhone production, the memory chip crisis is also driving up their prices – a factor that has already eroded Apple’s profit margins. That financial pressure could ultimately push Apple to raise the prices of iPhones and other products to help offset rising memory chip costs
“We continue to see market prices for memory increase significantly,” Cook told analysts Thursday. “As always, we will look at a range of options to deal with this.”
