Apple reports sagging iPhone sales in China as first-quarter earnings barely beat Wall Street’s expectations | Technology

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Apple reports sagging iPhone sales in China as first-quarter earnings barely beat Wall Street’s expectations | Technology

Apple slightly beat analysts’ expectations in its first-quarter earnings for fiscal year 2025 on Thursday. The iPhone-maker’s revenue rose by 4%, coming in at $124.30bn, barely above estimates of $124.12bn. Earnings per share were $2.40, just ahead of analysts’ expectations of $2.35.

Shares rose more than 8% in extended trading after CEO Tim Cook indicated in an earnings call on Thursday that Apple is on the trajectory for revenue growth next quarter.

Investors have been concerned about decreasing iPhone sales in China, the world’s biggest smartphone market, as domestic rivals like Huawei have grown. On Thursday, their fears materialized: Apple reported that iPhone sales fell by 11.1% in China in the first quarter and missed Wall Street’s expectations for iPhone revenue.

On the earnings call, Cook said Apple has a base of 2.35bn active devices, which was up from 2.2bn a year ago.

Despite the lackluster report, Cook called it “our best quarter ever”, citing the 4% rise in revenue. He touted the company’s foray into generative AI with its Apple Intelligence feature, which debuted for English-speaking iPhone users at the end of October. Cook said it was “unlocking new possibilities for our users” and that the company had seen strong sales where Apple Intelligence is available and weakening numbers where it is not, including in China.

Investors have been paying close attention to Apple Intelligence, which has progressed at a slower pace than its competitors and received mixed reviews. The AI-powered product, the company’s first using generative AI, was highly anticipated, but the tech has been riddled by inaccuracies and hallucinations.

During the earnings call, Cook assured analysts that the AI tech “will go mainstream”. Apple Intelligence is only available on new devices and in a handful of countries, which accounts for the slower adoption, Cook said. “Once you start using the features, you can’t imagine not using them anymore.”

The company’s earnings come during a bleak week for US tech stocks. After the ******** AI company DeepSeek saw its app hit the top spot in Apple’s App Store on Monday, stock prices tumbled for many tech companies – wiping more than $1tn from the leading US tech index. The chipmaker Nvidia broke record lows, seeing the biggest ever fall in US stock market history, losing nearly $600bn off its market value in a single day, though it recovered some value the following day.

More broadly, the tech sector regained its footing after

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and Meta beat Wall Street analysts’ expectations with their earnings reports on Wednesday.

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DeepSeek created its AI assistant for a fraction of the cost that US AI companies are spending to build their chatbots. This comes even as China is under strict chip export controls.

Apple appeared to be insulated from the ******, with its stock even notching up earlier this week. Analysts say that because Apple is focused on integrating its AI as a product into devices, it can keep costs lower than if it were building expensive cutting-edge models.

Despite that, Apple has experienced a rough start to 2025 with its stock prices falling roughly 8% through the first three weeks of the year, largely due to concerns around declining phone sales in China.

Apple Intelligence has also come with glitches and a knack for inaccurately summarizing facts in push notifications. The BBC filed a complaint with Apple in December saying the tech company’s AI feature was generating fake news attributed to the broadcaster.

In one notification summary, Apple’s AI wrote: “Brazilian tennis player, Rafael Nadal, comes out as gay.” Nadal is from Spain and is married to María Francisca Perelló. In another, Apple falsely said that Luigi Mangione, who is accused of killing the UnitedHealthcare CEO, had shot himself, which is also untrue.

Apple suspended the news summary feature earlier this month. In its latest iOS update, which rolled out this week, Apple started putting all other AI notifications in italics to indicate they were created by artificial intelligence.

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