Apple reported a holiday-quarter surge in iPhone sales to a new quarterly high while dealing with delays and early missteps in its artificial intelligence efforts. The company said its October-December results, announced Thursday, showed iPhone revenue of $85.3 billion, up 23% from the same period a year earlier.
The upbeat iPhone performance helped drive Apple’s profit to $42.1 billion, or $2.84 per share, a 16% increase from the prior year. Apple also reported total revenue rose 16% to $143.8 billion, with both sales and earnings exceeding analyst projections that typically guide investor expectations.
On a conference call with analysts, Apple CEO Tim Cook said, “The demand for iPhone was simply staggering.” He also used the moment to frame Apple’s iPhone as a platform for future AI capabilities, according to the report.
Apple’s holiday results reflected strong sales of the latest iPhone 17 models, the company said. The report said Apple still has not delivered on a 2024 promise to “smena” — described in the coverage as smartening up Siri assistance with AI.
To bolster demand amid its AI setbacks, Apple previously introduced what it described as a “liquid glass” design for the iPhone 17 and older models, installed through a free software upgrade released last September. The company said that approach contributed to iPhone sales reaching its highest three-month level since the device’s debut in 2007.
Zacks Investment Research analyst Ethan Feller said worries about Apple’s late start in AI appeared to have been overblown. Feller told investors Apple appears well positioned to roll out more of the technology “as a feature that scales naturally across its ecosystem,” which the report said also includes iPads, Mac computers and smartwatches, alongside iPhones.
Apple forecast that revenue for the January-March period would climb by at least 13% from last year, above the roughly 10% increase analysts had been anticipating. After the numbers were released, Apple shares rose by about 1% in extended trading, though the report said the stock remained slightly down for the year-to-date period and was not much higher than where it finished at the end of 2024.
The company said it expects to sustain the momentum by releasing a batch of delayed AI features, including an Siri upgrade intended to make the assistant more conversational and versatile. The report said Apple planned to tap Google’s latest AI model, Gemini 3, as part of that effort.
The AI push is also colliding with hardware constraints, the report said, including a shortage of memory chips needed for smartphones and laptops as demand from data centers rises for AI systems. The coverage said the shortage could threaten to curtail iPhone production and raise prices, a factor already eroding Apple’s profit margins.
Cook addressed the memory-cost pressure on the call, telling analysts, “We do continue to see market pricing for memory increasing significantly,” and adding, “As always, we’ll look at a range of options to, to deal with that.” The report said Apple ended last year as the worldwide sales leader with nearly 20% market share, just ahead of Samsung, according to International Data Corp.