The first three months of 2024 were probably not good ones for Apple. When the company reveals the financial results from its March quarter on Thursday, analysts predict a 5% annual drop in revenue will be one of the announcements.
But part of the reason for weak sales is customers anticipating AI-powered iPhones and Macs later this year. CEO Tim Cook almost certainly will drop hints about what’s coming in a conference call also scheduled for Thursday.
Apple quarterly results likely hurt by weak iPhone sales
Apple’s share price is down 8% so far in 2024, and some of the decline is from analysts’ predictions that iPhone sales in the first quarter dropped 10% year over year.
A significant share of that decline is reportedly coming in China, where iPhone sales dropped almost 20% in Q1, according to Counterpoint Research. Handset buyers in the country are turning to Chinese phone-maker Huawei instead.
But some of Apple’s expected revenue slowdown is coming from other products, too. It’s now been about 18 months since the last new iPad was released, for example. Still, fresh iPad Pro and iPad Air models are almost certainly coming at a product launch event on May 7.
Whatever the reasons, analysts predict Apple’s Q1 quarterly results will include total revenue of $90.36 billion, down from $94.84 billion in the same quarter of 2023. They also see small annual declines in earnings per share and net income.
Expect Tim Cook to promise Apple ❤️ AI
Apple has been criticized for not doing more with artificial intelligence. Rivals Microsoft, Google and Samsung have made big AI-related announcements, and the iPhone-maker’s relative silence on the matter helps explain some of the decline in the company’s share price … and likely in iPhone sales, too.
Cupertino hasn’t been completely mum, though. During Apple’s last conference call with investors, CEO Tim Cook said, “I think there’s a huge opportunity for Apple with GenAI and AI. We’re excited to share the details of our ongoing work in that space later this year.”
Expect him to make similar comments in the next such call Thursday. But Cook certainly won’t reveal details. Those eager to know specifics will need to wait until the May 7 event or (more likely) WWDC24 in June. Instead, expect the CEO to use the call to reassure investors in general terms that Apple will soon start adding AI features to its products so they can keep up with — and possibly beat — Android and Windows.
But the expense
Google reported its own quarterly financial results last week that included a surge in revenue from its AI products. But the advertising company also warned investors it’s pouring money into AI-related research and development.
The same goes for Microsoft. CFO Amy Hood told investors that the software giant expects “capital expenditures to increase materially on a sequential basis driven by cloud and AI infrastructure investments.”
Apple likely will find itself in the same boat. R&D to build artificial intelligence into iOS and macOS won’t come cheap.
