rewrite this title Key takeaways from Apple’s (AAPL) Q1 2025 earnings report | AlphaStreet

For Apple Inc. (NASDAQ: AAPL), 2024 was not a great year as the company drew criticism for lagging behind its tech peers in AI development and the iPhone faced stiff competition, especially in China, resulting in a sales slowdown. Meanwhile, the installed base of active Apple devices reached a new all-time high across product categories and markets in the latest quarter. This indicates that the sales headwinds are short-term and that the company continues to enjoy strong customer loyalty.

Stock Gains

The Cupertino-based gadget giant’s stock slid soon after the earnings announcement this week but bounced back quickly and rallied in after-hours trading on Thursday. In 2024, the stock gained as much as 34% and hit an all-time high in late December, with the company’s AI initiatives and successful launch of iPhone 16 lifting investor confidence. The stock looks set to continue the upward momentum, considering the leadership’s positive outlook on future sales trends.

It is estimated that the fast-growing services business will continue offsetting the iPhone slowdown in the coming quarters. While the company is betting big on Apple Intelligence, an artificial intelligence system that uses generative models to enhance user experience on Apple products, there have been concerns that the system not performing as expected.

iPhone Misses

Sales of the iPhone, which accounts for more than 50% of Apple’s revenue, declined 1% in the December quarter after growing 6% in the preceding quarter. The company reported total sales of $124.30 billion for Q1, compared to $119.58 billion in the same period of 2024. The top line exceeded estimates.

The highlight of the quarter was a 14% increase in Services revenue, which has been growing steadily in the recent past. Among the other segments, sales of iPad and Mac products grew 15% and 16% respectively from the year-ago quarter. Meanwhile, Wearables & Accessories sales dropped 2%. Overall, the company had a mixed holiday season.

EPS Beats

Geographically, revenue grew across all regions except Greater China where sales declined 11%, mainly reflecting competition from local players and a general slowdown in the Chinese economy. Higher sales translated into an increase in first-quarter profit to $36.3 billion or $2.40 per share from $33.9 billion or $2.18 per share in the comparable period a year earlier. Earnings also exceeded Wall Street’s projection.

“We grew in the majority of markets we track and reached all-time revenue records in several developed markets, including Canada, Western Europe, and Japan, and in emerging markets like Latin America, the Middle East, and South Asia. The iPhone active install base grew to an all-time high in total in an average geographic segment. We also set an all-time record for upgraders. According to a recent survey from Kantar, during the December quarter, iPhone was a top-selling model in the U.S., urban China, India, the U.K., France, Australia, and Japan,” said Apple’s new CFO Kevan Parekh at the Q1 earnings call.

The average price of Apple’s stock for the last 52 weeks is $211.12. In the early hours of Friday, the shares traded slightly higher, hovering near $240.