Apple hails ‘remarkable’ $144bn quarter with best-ever iPhone sales

Apple reported a big rise in sales to a record $144bn for the final quarter of last year as a surge in iPhone purchases during the holiday season helped it surpass already ambitious revenue targets.

A strong launch for the iPhone 17 pushed smartphone revenue up 23 per cent year-on-year in the three months to the end of December, driving overall revenue growth of 16 per cent, Apple said on Thursday.

The smartphone giant said sales in the crucial Chinese market jumped 38 per cent year on year, while it reported $42bn in net income for the quarter, well ahead of expectations.

Chief executive Tim Cook hailed “a remarkable, record-breaking quarter” driven by “unprecedented [iPhone] demand, with all-time records across every geographic segment”.

Strong hardware sales have helped quiet anxiety over Apple’s AI strategy, which has been plagued by false starts and rivals poaching top talent. Its shares were up 22 per cent over the past six months ahead of Thursday’s earnings report, beating the Nasdaq Composite.

Chief financial officer Kevan Parekh said Chinese consumers had snapped up the iPhone 17, driving a wave of people upgrading their Apple model or switching from rivals.

“It really comes down to the reception of the product line-up . . . the iPhone 17 family has seen a huge amount of enthusiasm, and that’s really the driver of performance.”

The Mac computer maker has stayed on the sidelines as its Big Tech rivals pour hundreds of billions into AI models, chips and data centres.

Apple announced a deal this month to use Google’s Gemini models to power features for the iPhone and improve the Siri voice assistant, in addition to its existing relationship with OpenAI.

Earlier on Thursday, Apple announced it had acquired secretive Israeli start-up Q.AI — whose technology analyses facial expression to understand “silent speech” — as part of an effort to compete in the emerging market for wearable AI-powered devices.

The deal valued the start-up at close to $2bn, the FT reported, making it one of Apple’s biggest-ever takeovers.

Apple is expected to face rising costs in the coming year from a global shortage of memory chips triggered by massive demand from new AI data centres.

Parekh said Apple had a gross margin of 48.2 per cent in the quarter, beating expectations of 47.5 per cent.

Services revenue hit a record $30bn as the high-margin division that includes the App Store, Apple Pay and iCloud continued a recent run of strong growth.