Apple (NASDAQ:AAPL) reported Q4 sales and profits that outperformed Wall Street’s projections. The 2.8% increase in iPhone sales, in line with expectations, helped offset significant drops in Mac and iPad sales.

The Cupertino-based company has managed the global smartphone decline better than many competitors but faces an uneven economic recovery in China, a crucial market. While Apple announced Q4 sales of around $89.50 billion, slightly down by 1%, it surpassed analyst estimates of $89.28 billion, with almost $1 billion more in services revenue. Net income increased by approximately 11%, with earnings per share at $1.46, exceeding analyst expectations of $1.39.

Notably, these results do not include the bulk of sales from Apple’s latest iPhone 15 models. Analysts and investors eagerly anticipate the conference call during which executives will provide an outlook for the company’s crucial holiday sales quarter. Apple is facing stiffer competition in the smartphone market this year, with Huawei Technologies re-entering the field with new phones. Apple’s sales in China dipped by 2.5% to $15.08 billion, though foreign exchange rates impacted the figures, as Apple’s business in China saw growth driven by iPhone sales and services revenue. Two of Apple’s new high-end models, the iPhone 15 Pro and Pro Max devices, are currently grappling with supply constraints. Despite these challenges, global trends appear favorable for Apple, with expectations that the smartphone market has hit its low point and may start recovering in 2024.

Additionally, the personal computer market is expected to perform better in the coming year, boosted by Apple’s recent introduction of new Mac machines. While the company’s wearable segment, including the Apple Watch and AirPods, saw a 3% drop in sales to $9.32 billion, and sales in the Mac and iPad segments continued to decline, the services segment witnessed a 16% increase to $22.31 billion. This is driven in part by Apple’s collaboration with global soccer superstar Lionel Messi, as well as Apple TV+ offerings. Looking ahead, investors are keen to see how Apple responds to the growth of generative artificial intelligence. Apple views this technology as a way to enhance a wide range of products. Nevertheless, the iPhone remains Apple’s flagship product, with Q4 sales totaling $43.81 billion, and it continues to dominate the market.

Featured Image: Unsplash @ Zana Latif

Please See Disclaimer