Apple’s holiday-quarter results showed iPhone demand remained strong even as the company acknowledged its early artificial-intelligence efforts had not met expectations, and said it is moving to deliver delayed AI features with help from Google. In its earnings announcement, Apple reported that iPhone revenue reached $85.3 billion for the October-December period, a 23% year-over-year increase, and said the quarter marked its highest iPhone sales for a three-month span since the original iPhone launch.
Apple’s broader financial picture also improved. The company reported quarterly profit of $42.1 billion, or $2.84 per share, up 16% from the prior year, and total revenue that rose 16% to $143.8 billion. Apple said both profit and revenue beat analysts’ projections used by investors to gauge the company’s performance.
In discussing the results, Apple CEO Tim Cook told analysts on a conference call that iPhone demand was extremely strong as customers bought the latest iPhone models. “The demand for iPhone was simply staggering,” Cook said, while also forecasting the device would become a “cutting-edge platform for AI.”
Apple’s report came with fresh details about its AI plans. The company said it has tried to address earlier AI “miscues” as it prepares an update to Siri, with a new software upgrade and a redesigned “liquid glass” approach for the iPhone 17 and older models that was delivered through a free update released last September. Apple said the AI update was intended to help support its holiday hardware momentum, even as it continues to roll out delayed AI features.
Apple also said it is drawing on Google’s latest AI model, Gemini 3, for the Siri upgrade it has described as more conversational and versatile. The company’s plan to use Gemini for iPhone AI features follows earlier reporting about Apple’s shift toward Google for its upcoming assistant capabilities, including in a related MSI story published earlier this month. MSI previously reported how Apple planned to use Gemini for Siri.
Zacks Investment Research analyst Ethan Feller said concerns about Apple’s late start in AI appeared to have been overstated, and that the company now appears positioned to roll out additional AI capabilities “as a feature that scales naturally across its ecosystem,” which includes iPads, Mac computers and smartwatches in addition to iPhones. Apple said more than 2.5 billion active devices worldwide are running on its various operating systems.
Even with strong demand, Apple faces operational constraints tied to AI, including a shortage of memory chips used in smartphones and laptops. Cook said Apple continues to see market pricing for memory increase “significantly,” and that the company is reviewing options to address it. The chip shortage has also driven up prices, contributing to pressure on profit margins, which Apple said could eventually affect product pricing.
For the near term, Apple forecast revenue growth for the January-March period. The company said it expects revenue to climb by at least 13% from the prior year, a stronger outlook than the roughly 10% bump analysts had been anticipating. Apple shares rose about 1% in extended trading after the earnings release, though the stock remained slightly lower for the year at the time of the report.