Apple has recently reported quarterly revenue of $94.9 billion for the three months ending September 28, 2024, narrowly surpassing analyst expectations. A significant contributor to this performance was the iPhone sales, which reached $46.2 billion, exceeding the anticipated $45.2 billion. However, revenue in Greater China fell to $15 billion, reflecting ongoing challenges in that market, where competition from local brands remains fierce. In contrast, the Americas generated $41.7 billion and Europe contributed $24.9 billion to Apple's overall revenue. Despite these positive results, shares fell 2% in after-hours trading, although the company has seen a year-to-date increase of over 20% in its stock value. [c9c6f61d]
In the context of these financial results, Apple is also facing scrutiny regarding its tax obligations, having incurred a $10.2 billion back-tax charge due to a recent EU tax ruling. CEO Tim Cook announced the new iPhone 16 lineup, which is expected to drive further sales, particularly as Apple emphasizes quality and safety in its AI feature rollout. Services revenue hit an all-time high of $25 billion, marking a 12% increase, showcasing the growing importance of this segment to Apple's overall business strategy. [c9c6f61d]
Despite the boost from iPhone sales, analysts have raised concerns about the long-term sustainability of this growth, especially given the 7.7% decline in sales in Greater China, which fell to $66.95 billion for the year ending September 28, 2024. The decline in the Chinese market is compounded by a slowdown in orders for the Pro models of the iPhone 16, as reported by JPMorgan analyst Samik Chatterjee. The competitive landscape in China, particularly from brands like Huawei and Xiaomi, continues to challenge Apple's market share. [4676e936] [79f36b9a] [48d3d8cf]
Looking ahead, Morgan Stanley analysts have upgraded Apple stock to their Top Pick, projecting a record upgrade cycle driven by the integration of Apple Intelligence into its devices. They estimate that Apple will ship 235 million iPhones in fiscal year 2025 and 262 million in fiscal year 2026, which are above consensus estimates. This anticipated upgrade cycle is expected to significantly impact Apple's performance, with upgrade rates in the US projected to reach a record 36% in fiscal year 2025. [79f36b9a] [48d3d8cf]