Apple Poised for Revenue Surge on Strong China iPhone Demand

Apple Poised for Revenue Surge on Strong iPhone Demand
Apple is anticipated to report its most significant quarterly revenue increase in two years this Thursday. The company’s iPhone sales have outperformed recent trends, particularly in China, towards the end of its annual release cycle. The results will offer initial insights into the demand for the recently launched iPhone 16 series.
AI Focus Amidst Market Competition
The spotlight will be on executive commentary for Apple’s fiscal first quarter. Concerns have emerged that the company’s slow rollout of its Apple Intelligence features may hinder the much-anticipated AI-led “super-cycle” for its best-selling product. Rivals like Samsung Electronics and Microsoft have aggressively pursued AI-powered applications.
Apple Intelligence Rollout and Global Availability
Apple Intelligence initially launched in English to a limited number of U.S. customers in October, several weeks following the iPhone 16’s release. However, the features remain unavailable in key markets such as Europe and China. This has sparked worries that consumers may postpone device purchases to the following year, potentially delaying an AI-driven sales boost.
iPhone Sales Expected to Rebound
Analysts’ estimates compiled by LSEG project a 3.8% increase in iPhone sales during the September quarter, breaking the trend of two consecutive quarters of decline. Overall revenue is predicted to rise by 5.7% in the fiscal fourth quarter (July-September).
China Market Share and Discounting
Apple’s revenue from Greater China is expected to increase by 6.6%. Ahead of the iPhone 16 Plus’s official release, local retailers like Pinduoduo offered discounts of up to 10%. Together with the iPhone 16 series, these promotions contributed to Apple securing the second-largest market share in China for the three months ending in September.
iPad and Services Growth
iPad sales are expected to rise by 10.1% to $7.09 billion, continuing the trend of strong demand for Apple’s tablets. The launch of more powerful models has fueled the growth. Apple’s services business, encompassing the App Store, is projected to experience a 13.3% sales increase, slightly slower than the previous quarter.
Regulatory Challenges
Apple’s services business faces increasing regulatory hurdles. In June, the European Union antitrust authorities accused Apple of violating the bloc’s tech regulations. Additionally, the company’s lucrative partnership with Alphabet, which makes Google the default search engine on iOS, is under scrutiny in the United States.
Fourth-Quarter Financial Impact
Apple’s fourth-quarter results will reflect a one-time income tax charge of approximately $10 billion. This stems from the European Court of Justice’s September ruling against the company in its Irish tax dispute.