Apple Inc. (NASDAQ:AAPL) is expected to announce a dip in iPhone sales during the April-June quarter, as consumers eagerly await the release of a new model in a sluggish economy. Analysts emphasize the significance of Apple detailing its implementation of artificial intelligence to fuel growth during this period.
As the world’s most valuable company, Apple (NASDAQ:AAPL) is poised to conclude the Big Tech earnings season on Thursday, with Refinitiv projecting a 1.6% decline in total quarterly revenue. If realized, this would mark the steepest drop in third-quarter revenue since 2016.
According to a poll by Visible Alpha, iPhone sales are anticipated to have dropped by over 2% in the quarter, a contrast to the nearly 3% increase recorded during the same period last year, and a 1.5% rise in the previous quarter (January-March).
This quarterly report could stand out as a deviation from the generally upbeat earnings season experienced by tech giants such as Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT), who exhibited resilience in their cloud businesses and witnessed an upswing in digital ad sales.
TECHnalysis Research founder asserted that Apple is not immune to macroeconomic trends and will continue to set the pace in the smartphone industry for the foreseeable future.
Anticipation for the new iPhone 15, expected to be unveiled next month, might give iPhone sales a boost in the July-September quarter, especially if it features the more widely accepted USB-C port on some models. However, analysts anticipate mixed results for this upcoming period.
While Apple traditionally refrains from providing quarterly outlooks, analysts believe the company may elaborate on how it is leveraging AI to enhance its upcoming products. Apple has thus far avoided explicit references to AI in its events, setting it apart from tech giants like Alphabet and Microsoft. Nevertheless, Bloomberg News previously reported that Apple has been discreetly developing its own framework to create large language models known as Ajax.
Analysts at Wells Fargo predict that Apple’s updated comments on its AI aspirations will attract attention and could positively impact the stock’s performance.
Apple’s shares have witnessed a remarkable surge, gaining over 50% in value so far this year, surpassing the nearly 37% increase observed in the tech-heavy Nasdaq Composite (IXIC).
iPhone Sales Decline
The decline in iPhone sales is expected to be more pronounced in the Americas, with analysts projecting a 6% drop in revenue from this region. While sales from China are anticipated to remain flat due to an uneven economic recovery. Despite this, Apple has performed better than its Android rivals in the country.
According to market research firm International Data Corp., overall smartphone shipments to China decreased by 2.1% in the second quarter.
Analysts from Piper Sandler believe that any sales weakness in China could be offset by strong sales momentum in India, where Apple is likely to experience only a marginal decline in iPhone sales.
While Mac and iPad sales are predicted to dip by 10.6% and 11.2%, respectively, the services business is expected to be a bright spot. This segment, which includes Apple’s App Store, as well as audio and video streaming services, is estimated to grow by 5.7%. The boost in the ad market and higher prices for iCloud subscriptions contribute to this growth, maintaining a pace similar to the preceding three quarters.
Featured Image: Unsplash
Author Faith Yakubu 
