Apple Stages China Comeback: First Sales Growth Since 2023 Sparks Rally
After a brutal two-year slump, Apple's China gamble finally pays off.
The tech giant just posted its first quarterly revenue growth in the world's second-largest economy since Q2 2023—proving even Wall Street's favorite whipping boy can catch a break.
iPhones Defy Gravity
Cupertino's flagship devices clawed back market share despite local rivals flooding the zone with cheap alternatives. Turns out brand cachet still moves needles—even in a downturn.
The Yuan Position
Analysts whisper this rebound came at a cost: heavier discounts, channel stuffing, and creative accounting that'd make a crypto exchange blush. But when the Street wants a growth story, nobody asks how the sausage gets made.
One decent quarter doesn't fix Apple's China problem. But for today? Tim Cook gets to pop champagne while Beijing's homegrown rivals chew their chopsticks in frustration.
Tariffs and trade-in programs shape Apple’s earnings outlook
Apple’s overall revenue in the June quarter surged 9.6% to $94 billion, beating Bloomberg’s average of $89.3 billion. The company also estimated that its revenue WOULD rise by a mid- to high-single-digit percentage for the current quarter, topping the 3% growth anticipated by analysts.
According to Cook, the revenue growth in the June quarter was attributed to increased product sales in Greater China and other emerging markets. He added that US tariffs drove up their spending costs, although they also boosted sales last quarter as consumers hurried to buy ahead of anticipated price hikes.
The Cupertino, California-based company had estimated a $900 million tariff burden with only modest revenue growth for the last quarter. The company later reported that the tariffs cost them $800 million. Apple, however, anticipates a bigger expenditure, about $1.1 billion in related expenses from the levies imposed for the current quarter.
Services and iPhones drive record revenue amid AI concerns
Nonetheless, the services division continues to lead the company’s growth, posting a 13% year-over-year increase to $27.4 billion in the June quarter. However, the unit is under increasing pressure. Global regulators are targeting App Store practices that could diminish income from apps and subscriptions. At the same time, a US Justice Department case may jeopardize its lucrative default search deal with Google, which earns the company about $20 billion annually.
The company also accrued over $44.6 billion from iPhone sales during the June quarter, topping estimates of $40.1 billion. However, the firm is concerned that consumers could eventually gravitate toward screen-free AI devices, potentially undermining the iPhone’s dominance.
Cook remarked, “It’s difficult to see a world where iPhones are not living in it, and that doesn’t mean that we are not thinking about other things as well, but I think that the devices are likely to be complementary devices, not substitution.”
Meanwhile, the iPhone Maker made $8.05 billion from its Mac sales, surpassing Wall Street expectations of $7.3 billion.
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