Apple’s recently released fiscal fourth-quarter results have left investors unimpressed, shedding light on the company’s urgent need for its consumer-oriented AI platform, Apple Intelligence, to succeed. While Apple managed to surpass Wall Street’s revenue and earnings per share estimates, its overall progress remained modest. The lackluster demand for iPhones, which account for a significant portion of Apple’s revenue, continues to undermine the company’s growth.
Despite the launch of Apple Intelligence, which requires the newer iPhone 15 or iPhone 16, iPhone revenue only grew by 5.5% in the last quarter. This lukewarm response to Apple’s AI efforts is concerning, as the iPhone business has shown little growth since early 2022. The company’s total top-line growth is also hampered by fading sales growth for Macs and iPads, with only its services arm showing any significant net long-term growth.
CEO Tim Cook’s comments during the earnings call further dampened expectations, as he stated that Apple is only aiming for low- to mid-single-digit top-line growth in the current quarter. The upcoming holiday season, typically a strong period for iPhone sales, is unlikely to provide a significant boost due to lackluster demand compared to pre-2022 levels. Apple Intelligence remains the only potential catalyst that could reignite iPhone sales, but its impact has been limited thus far.
While generative AI-capable smartphones like the iPhone 15 and iPhone 16 are expected to gain traction in the market, other manufacturers such as Samsung and Google are also offering AI-ready devices. Additionally, cloud-based AI platforms like Microsoft’s CoPilot provide an alternative for consumers who prefer to offload AI processing to external sources. Concerns have also been raised by technology market research firm Gartner, which suggests that generative AI may not deliver on its initial promises, potentially limiting its ability to drive iPhone demand.
Despite these challenges, Apple remains one of the world’s largest and most profitable companies. Its services business continues to grow, with the company projecting a growth rate of just under 13% for the current quarter. However, without a resurgence in iPhone sales, Apple is likely to report mediocre results in the foreseeable future. While the potential for growth lies in AI, its success is far from guaranteed.