Apple (AAPL) released second-quarter results Thursday that showed sales fell less than expected in the quarter while profits beat estimates, sending shares up as much as 4% in extended trading.
Apple’s revenue in Greater China fell 8% year-on-year to $16.37 billion, although that was better than the $15.87 billion analysts had expected. Top iPhone revenue reached $45.96 billion, up from $51.33 billion in the second quarter of last year.
Overall, Apple reported earnings per share (EPS) of $1.53 on revenue of $90.8 billion. Wall Street expected EPS of $1.50 on revenue of $90.3 billion, according to analyst estimates compiled by Bloomberg.
The company also announced it was authorizing an additional $110 billion for stock repurchases and increasing its dividend to $0.25 per share.
Apple is facing the combination of a Huawei resurgence and a slowing economy in China, which is reducing its sales.
The company’s shares are down about 10% year to date and 2% over the past 12 months. Shares of big tech rivals like Microsoft (MSFT) and Google (GOOG, GOOGL), meanwhile, are up 30% and 58%, respectively, over the past year.
Mac revenue came in at $7.45 billion versus a forecast of $6.79 billion, while iPad revenue came in at $5.55 billion. Analysts expected $5.91 billion. Wearables, which include AirPods, Apple Watch and Vision Pro, generated $7.91 in revenue.. Wall Street was looking for $8.28 billion.
But there was one bright spot for Apple during the quarter. Service revenue reached $23.87 billion, up from $20.91 billion last year, an all-time high. Analysts expected $23.28 billion.
Apple is also gearing up for its Worldwide Developers Conference (WWDC) in June, where it would unveil the latest versions of its iOS, macOS, watchOS, iPadOS, and visionOS operating systems. One of the biggest announcements at the show will likely be how Apple will integrate generative AI into its various products.
The company is late to the generative AI party, with Big Tech competitors already rolling out their own product offerings to consumers and businesses. But that doesn’t mean Apple is sitting still. The company has been busy buying up AI companies and building its own large language model to potentially power its AI efforts.
Apple is also looking to work with OpenAI, Google and others to bring its AI offerings up to par, according to Mark Gurman of Bloomberg.
Generative AI still remains a niche product among consumers. Sure, Google and Samsung offer generative AI capabilities on their smartphones, and PC makers are increasingly turning to so-called AI PCs, but the apps still largely feel like technology demonstrations rather than revolutionary features that will significantly boost sales. Apple has the opportunity to change that.
Update: This article has been updated to reflect a change in Apple’s revenue estimates for Greater China.
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