Apple Takes a Hit as iPhone Sales Drop 10%

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Key Takeaways

  • Apple Inc. reports a 10% decrease in iPhone sales during Q2 2024..
  • iPad sales also fell by 17% from the previous year.
  • Apple CEO Tim Cook hints at upcoming significant investments in generative AI.

Apple Inc. has reported a 10% drop in iPhone sales for the second fiscal quarter of 2024, with revenues falling from $51.33 billion to $45.96 billion year-over-year.

Some of the blame goes to an 8% slump in iPhone sales in China. Analysts also suspect Apple’s wait-and-see approach to artificial intelligence (AI) compared to rivals like Google and Microsoft might be keeping consumers from upgrading their iPhones just yet.

However, despite this slump, Apple’s services sector, which includes offerings like iCloud, Apple TV+, and Apple Music, saw a 14% increase in revenue. This performance beats Wall Street expectations, causing the stock to surge over 6% in after-hours trading on May 2.

Apple shares price | Source: Google Finance
Apple shares price | Source: Google Finance

Apple’s CFO, Luca Maestri, noted on the call, “We expect our services business to grow double digits at a rate similar to the growth we reported for the first half of the fiscal year”.

Meanwhile, Apple’s iPad sales dropped 17% compared to last year, from $6.67 billion to $5.56 billion, likely due to the lack of new tablet releases since 2022.

However, the company is expected to announce new iPads at an event next week, which could boost sales and revitalize the product line. The event, “Let Loose,” will take place on May 7 and will include a new iPad Air, iPad Pro, a keyboard case, and an Apple Pencil.

In other news, Apple’s Vision Pro headset sales have been reportedly slower than expected, with Apple Analyst Ming-Chi Kuo revealing that a cut in production has been made on the mixed-reality headset

In the midst of these challenges, Apple CEO Tim Cook teased the introduction of new generative AI capabilities coming to its products. Cook said Apple will make an announcement in the “weeks ahead” and added that he expects generative AI capabilities to come to the “vast majority of our devices.”

“We continue to feel very bullish about our opportunity in generative AI. We are making significant investments, and we’re looking forward to sharing some very exciting things with our customers soon,” Cook said.

While a 10% drop in iPhone sales is something to worry about by any Apple investor, the company’s focus on AI and services could open up new avenues for growth. With Cook’s teaser on AI, it seems that Apple is gearing up to make a huge shake-up in the AI landscape.