Apple shares up 6% in after-hours trade as Cook says revenues will get back to growth
CEO Tim Cook said iPhone sales still experienced 'growth in some markets, including China'.
Apple shares rose 6% in after-hours trade tonight after the iPhone giant delivered a smaller-than-expected decline in quarterly revenue, and chief executive Tim Cook said the company expects a return to sales growth in the current quarter as it invests in artificial intelligence features to be unveiled in the coming months.
Mr Cook said revenue in its second quarter fell to $90.8bn (€84.6bn) but eyed revenues "to grow low-single digits" in the current quarter. Sales of iPhone fell 10.5% to $45.9bn as the company faces tougher competition from among others a rejuvenated Huawei in China.
Mr Cook surprised many observers by reporting that iPhone sales still experienced "growth in some markets, including China", with Apple's revenue decline in China not as steep as analysts expected.
Apple has said little about its product plans for artificial intelligence, the technology on which rivals Microsoft and Alphabet's Google are placing huge bets. The company started ramping up research and development spending last year.
"We continue to feel very bullish about our opportunity in generative AI and we're making significant investments," he said tonight.
In the immediate run-up to the latest earnings, Apple shares had something of a good week, but only after performing poorly compared with many of its tech Titan rivals this year.
Cook is hoping the latest results will answer some difficult questions for investors, not least whether the iPhone giant is losing momentum to local phone makers in the key Chinese market, and whether the corporate can unveil products and services that tap into the promise of artificial intelligence. Like other US tech giants, Mr Cook also has yet to detail in any depth how he plans to navigate the heightened scrutiny from the European Union Commission, armed as it is with the new digital markets legislation.
This week's gains added billions of dollars and lifted the stock market valuation for the iPhone maker to $2.67tn (€2.49tn). Other tech Titans have done much more.
Microsoft and Google-owner Alphabet have successfully whetted investors’ appetite for AI products, despite the billions of dollars in investments entailed in bringing new services to market.
Meanwhile, Apple has been navigating a series of difficult challenges over its production and sales of iPhones in China, even as it attempts to plan for any worsening in the trade skirmishes between Joe Biden's White House and Beijing. More than most, Apple's supply chains and lucrative consumers are for the time being tied to China.
The fortunes of Apple, Google, and Microsoft, as well as Meta, which owns Facebook and Instagram, are closely watched in Ireland, not only for the up to 15,000 people they directly employ here, but for the unspecified billions of euro they contribute by way of corporation tax receipts to the Government's coffers.
For investors, the mixed messages of the US Federal Reserve, wary of still-hot inflation there, to pledge to cut US interest rates deeply this year is complicating matters. Big Tech shares tend to benefit from lower borrowing costs, and many of their shares did indeed post gains in Today's session after the US central bank softened its cough.
A slew of earnings in the past few weeks showed a mixed set of results: Google-owner Alphabet and Microsoft delivered reassurance to investors that the billions of dollars they will invest in artificial intelligence products and services will pay off for investors.
Alphabet shares are up strongly this year to value the Google owner at over $2tn. After a spectacular 2023, Microsoft shares had also driven on this year, powered by its AI promise.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
