Strong iPhone 17 Sales Help Calm Investor Fears Over Apple’s AI Lag
Apple has delivered a strong earnings performance that is easing concerns on Wall Street about the company’s perceived struggles in artificial intelligence, with robust sales of the iPhone 17 taking centre stage.
The technology giant reported quarterly revenue of $143.8 billion, comfortably beating market expectations and marking a sharp rise from the $124.3 billion recorded in the same period a year earlier. Much of that growth was driven by the iPhone, which generated $85.3 billion in revenue for the quarter, significantly above analysts’ forecasts.
The figures reflect the first full quarter in which the iPhone 17 was available, following its release in September. Expectations were particularly high for the device, as Apple faces growing scrutiny over whether it is falling behind rivals in the race to dominate AI-powered consumer technology.
Speaking during a call with analysts, chief executive Tim Cook said demand for the latest iPhone exceeded expectations, describing it as “staggering.” He revealed that Apple recorded a surge in upgrades from existing users, alongside strong growth from customers switching from Android devices.
Apple also disclosed that the number of active devices worldwide has climbed to 2.5 billion, underlining the strength of its ecosystem. Notably, revenue in China – a market that has posed challenges in recent years – rose sharply to $25.5 billion, up from $18.5 billion a year earlier.
The upbeat results follow a difficult 2025 for the company, which included supply chain pressures, tariff-related costs and delays to a revamped version of its digital assistant, Siri. Cook confirmed that the upgraded Siri is expected to launch later this year.
In a further sign of Apple’s efforts to close the AI gap, the company recently announced a partnership with Google that will see the search giant’s AI and cloud infrastructure support Apple’s own AI models, including those powering Siri. Cook described the deal as a collaboration and said the company was satisfied with the arrangement.
Despite the positive momentum, challenges remain. Apple is navigating an industry-wide shortage of memory components as manufacturers prioritise data centre infrastructure over consumer electronics. Cook said the company is currently facing supply constraints, adding that while the impact was limited in the December quarter, it could become more noticeable in the coming months.
Market analysts also noted that while the broader iPhone 17 range has performed well, demand for the iPhone Air has been relatively subdued. Even so, investors appear reassured for now, as strong hardware sales help offset lingering questions about how quickly Apple can translate AI investments into new revenue streams.
Addressing those concerns, Cook said artificial intelligence presents “a wide range of opportunities” across Apple’s products and services, signalling that monetisation will come over time rather than through a single launch.
