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Apple Hits Record Earnings Even as iPhone Revenue Declines

31/1/25

By:

Amitabh Srivastav

AI Push and Services Growth Drive Apple’s Best-Ever Quarter

AI Push and Services Growth Drive Apple’s Best-Ever Quarter

Introduction

Apple has reported its best-ever earnings for the holiday quarter, raking in $124.3 billion in revenue, a 4% increase year-over-year. While Mac, iPad, and services revenue saw growth, iPhone revenue dipped slightly, raising questions about the demand for Apple Intelligence and the latest iPhone 16 series.

CEO Tim Cook remains optimistic, citing AI-driven upgrades as a key factor in boosting sales in certain markets. However, with AI features only recently being enabled by default in iOS 18.3, their full impact on user upgrades remains unclear.

Apple’s Best Quarter Ever: A Revenue Breakdown

Apple’s latest financial report highlights strong performance across most product categories:

📈 Total Revenue: $124.3 billion (4% YoY growth)📈 Mac & iPad Growth: Helped by new MacBook Pro and Mac Mini models.📈 Services Revenue Up: The App Store, iCloud, and Apple Music continue to thrive.📉 iPhone Sales Dip: A slight year-over-year decline, despite the iPhone 16 series launch.📉 Wearables Down: Apple Watch & AirPods revenue dropped slightly.

This quarter is Apple’s most critical as it includes the holiday season and reflects initial demand for the iPhone 16 lineup.

iPhone Revenue Declines: Is AI Failing to Drive Upgrades?

Apple Intelligence was expected to be a key selling point for the iPhone 16 series, but its impact on sales has been underwhelming so far.

🔹 AI Rollout Delayed – Apple only turned on AI features by default with iOS 18.3 this week.🔹 Market Differences – Cook claims iPhone sales were better in regions where Apple Intelligence was available.🔹 Pro Models in Decline? – The standard iPhone 16 models offer better value, which could be lowering sales of Pro variants.

Despite Apple’s AI focus, consumers aren’t rushing to upgrade just yet—especially with features like Siri enhancements still pending.

Mac and iPad See Growth Amid Refreshes

Apple’s Mac & iPad divisions performed well, thanks to:

💻 New MacBook Pro & Mac Mini – Smaller, more powerful designs driving demand.📱 iPad Refreshes – Improved models attracting both casual and professional users.

These updates helped offset weaker iPhone sales, showcasing Apple’s diversified revenue streams.

Services Boom: A Key Growth Driver

Apple’s services business continues to expand, fueled by:

App Store Revenue – Increased app purchases and subscriptions.✅ iCloud & Apple Music – More users opting for Apple’s premium ecosystem.✅ Content & Streaming – Apple TV+ and Apple Arcade contributing to growth.

Services now play a crucial role in Apple’s financial success, offering high-margin revenue compared to hardware sales.

Conclusion

Apple has once again delivered record-breaking earnings, but declining iPhone sales raise questions about AI adoption and consumer demand.

With Apple Intelligence expanding to more languages in April, the full impact of AI-driven upgrades remains to be seen. In the meantime, Macs, iPads, and services continue to power Apple’s growth, proving that the company is more than just an iPhone business.

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