Apple (AAPL)’s second-quarter results on Thursday showed that revenue for the quarter didn’t fall as much as feared, but profits beat expectations, sending the stock up as much as 4% in after-hours trading.
Apple’s sales in Greater China fell 8% from a year earlier to $16.37 billion, but exceeded analysts’ expectations of $15.87 billion. The company’s key iPhone sales totaled $45.96 billion, down from $51.33 billion in the second quarter of last year.
Overall, Apple reported earnings per share (EPS) of $1.53 and revenue of $90.8 billion. Wall Street had expected EPS of $1.50 and revenue of $90.3 billion, according to analyst estimates compiled by Bloomberg.
The company also announced that it has authorized an additional $110 billion for stock repurchases and increased its dividend to $0.25 per share.
Apple is dealing with a one-two combination of a resurgent Huawei and a slowing Chinese economy that is hurting sales.
The company’s stock price has fallen about 10% since the beginning of the year and 2% in the past 12 months. Meanwhile, shares of big tech rivals like Microsoft (MSFT) and Google (GOOG, GOOGL) are up 30% and 58%, respectively, over last year.
Mac sales came in at $7.45 billion versus the expected $6.79 billion, while iPad sales reached $5.55 billion. Analysts had expected $5.91 billion. He earned $7.91 from wearable products, including AirPods, Apple Watch, and Vision Pro.. Wall Street was seeking $8.28 billion.
But there was one bright spot for Apple this quarter. Services revenue hit a record high of $23.87 billion, up from $20.91 billion last year. Analysts had expected $23.28 billion.
Apple is also preparing for June’s Worldwide Developers Conference (WWDC), where it will reportedly announce the latest versions of its iOS, macOS, watchOS, iPadOS, and visionOS operating systems. One of the biggest announcements at the show will be how Apple will integrate generative AI into its various products.
The company is a latecomer to generative AI, with rivals across Big Tech already rolling out their own products for consumer and enterprise customers. But that doesn’t mean Apple was twiddling its thumbs. The company is busy acquiring AI companies and building its own large-scale language models that could enhance its AI efforts.
Apple is also working with the likes of OpenAI and Google to make its AI products the best they can be. According to Bloomberg’s Mark Garman.
Generative AI is still a relatively niche product among consumers. Sure, Google and Samsung offer generative AI capabilities on their smartphones, and PC manufacturers are increasingly leaning toward so-called AI PCs, but applications are still less about innovative features that drive big sales. It mostly feels like a tech demo. Apple has a chance to change that.
Update: This article has been updated to reflect changes to Apple’s Greater China revenue forecast.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter @Daniel Howley.
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