Fourth-quarter earnings will be a test of iPhone 16 and Apple Intelligence demand
Apple $AAPL’s (AAPL) fourth-quarter report Thursday will be the first glimpse into sales since Apple unveiled its latest slate of iPhones and new artificial intelligence features, known as Apple Intelligence, at its annual event in early September — and Wall Street is expecting a strong quarter of yearly growth.
Analysts are expecting earnings per share of $1.60 for Apple’s fourth fiscal quarter, according to estimates compiled by FactSet (FDS). Net income is projected to reach $24.24 billion, which would represent more than 5% growth from the same period a year ago.
Apple has had a strong year over all. Its shares are up about 25% year-to-date, just beating the S&P 500 index.
While this quarter could help gauge preliminary demand for Apple Intelligence, its delayed rollout means that analysts likely won’t get a good look at its impact on iPhone sales until at least next quarter.
“Given the staggered launch of Apple Intelligence, we expect iPhone demand to pick up post initial release of Apple Intelligence in late Oct.,” Bank of America $BAC (BAC) researchers said in a note. Apple Intelligence was officially introduced to iPhone 15 Pro models and higher as a software update early this week.
The jury is still out on whether Apple Intelligence will really help boost iPhone demand. While some are expecting the new AI tools to drive iPhone sales, analysts at Jefferies (JEF) said in a recent note that the upgrades — which will include limited hardware capabilities and a relatively small AI model — “are not significant enough” to power iPhone sales.
Nevertheless, Wall Street is projecting $94.46 billion in revenue, also up more than 5% from a year ago. That includes $45.17 billion in iPhone sales. Geographically, almost half of Apple’s total revenue — or $42.23 billion — is expected to come from the Americas, while China is estimated to account for $16.08 billion in revenue.
Apple has managed to recapture some of its market power in China. The iPhone maker had the second-highest share of the Chinese smartphone market at 15.6% in the third quarter, re-entering the top five after falling to sixth place in the second quarter, according to data from the International Data Corporation.
It made its comeback with the launch of the iPhone 16, according to the market intelligence firm, with initial sales on par with the iPhone 15. The IDC said it “anticipates that upcoming promotions and the anticipated launch of Apple Intelligence will drive future demand.”
iPhone 16 sales in China were up 20% in the first three weeks of the launch compared with the iPhone 15 series, Bloomberg reported, citing data from Counterpoint Research. And Chinese consumers opted for the more expensive Pro and Pro Max models, according to the data, with sales of those models rising 44% year-on-year.
— Britney Nguyen contributed to this article.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
