Apple iPhone buyers aren’t holding off for enhanced AI capabilities. For Apple, this presents a mix of positive and challenging implications.
The upside was clear in the company’s fiscal first-quarter earnings released late Thursday. iPhone revenue jumped 23% year-over-year to more than $85 billion (precisely $85.3 billion in reports), significantly exceeding Wall Street forecasts. This marked the strongest December-quarter growth for Apple’s flagship segment in over a decade — and indeed its best iPhone quarter ever.
The surge was so robust that Apple is now racing to catch up on supply. On the earnings call, CEO Tim Cook noted that the company had largely depleted its inventory during the quarter and has shifted into “supply chase mode” to ramp up production and meet the exceptionally high demand.
Dan Gallagher for The Wall Street Journal:
The company admitted, for instance, that it is having trouble getting enough production capacity for the most advanced processing chips that power its latest products.
Taiwanese chip-making titan TSMC is Apple’s main producer of those chips. But TSMC is also the main producer of AI chips for companies such as Nvidia and Advanced Micro Devices. And the red-hot demand and high prices those chips command are leaving little spare room for other product segments in a finite number of production lines.
Apple still managed to project total revenue growth of 13% to 16% for the March-ending quarter, which beat the 10% analysts had been expecting, according to FactSet estimates. But the stock rose only slightly in after-hours trading Thursday. Investors remain worried about the durability of the latest iPhone sales surge and Apple’s ability to deal with sharply rising costs for memory chips, which are also facing a severe supply shortage because of booming demand for AI systems.
MacDailyNews Take: Invented “worries” and “concerns” following an all-time record quarter with remarkably strong Q2 guidance including an uptick in gross margins, no less, making these “worries” and “concerns” over memory chip prices unfounded. AAPL still under $260 looks cheap.
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