Sales at Apple rebounded this spring, overcoming weaknesses in China and a dip in iPhone sales, providing some positive news to jittery financial markets.
The tech giant reported $85.8 billion (£67.3 billion) in revenue over the three months to June, up 5% year-on-year, marking a return to growth after a slump at the start of 2024.
This report came as the three major share indexes in the US closed lower, with investors selling off big names like Amazon in after-hours trading.
Shares in Intel plunged by more than 19% as the chip-maker responded to a sales slump with a cost-cutting plan that includes over 15,000 job cuts.
Amazon shares also fell by more than 4% after the e-commerce giant reported sales growth of 10% to $148 billion, marking a slowdown from the prior quarter and forecasting further weakening in the months ahead. This is expected to pressure margins even as the firm ramps up investments in areas such as artificial intelligence (AI).
Overall, the Dow Jones Industrial Average dropped 1.2%, the S&P 500 slipped almost 1.4%, and the Nasdaq fell 2.3%.
On Friday, stocks in Asia also declined. Japan’s Nikkei was the hardest-hit major index, ending the day down by 5.8%.
Bets on AI have scrambled markets in recent weeks, as investors grow weary of the heavy costs associated with such investments. Firms perceived as lagging in the AI race are hit hard.
Intel is among the companies that have fallen out of favor, as businesses turn to rival Nvidia, known for its powerful AI chips. The company reported a 1% year-on-year decline in sales for the three months to June and warned that the second half of the year would be worse than expected.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI,” Chief Executive Pat Gelsinger wrote in a memo to staff. He said the situation required “bolder actions” and the firm had to “fundamentally change the way we operate.”
In contrast, Apple stated it was well positioned to benefit from changes as AI-powered improvements to its software convince customers to upgrade their devices. The company recently released some new features, branded as “Apple Intelligence,” to developers in the US.
The new system makes it easier for iPhone users to record and transcribe phone conversations, generate personalized emojis while messaging, and interact more conversationally with the company’s voice assistant, Siri, among other changes. Apple has said these features will be released more widely later this year, but only on its newer devices.
Apple CEO Tim Cook said the new features would provide “another compelling reason for an upgrade.” The firm expects growth to continue in the months ahead.
“We remain incredibly optimistic about the possibilities of AI and will continue to make significant investments in this technology,” he said.
During the April to June period, iPhone sales slipped 1%, a drop outweighed by increased sales of Macs and iPads. Apple also reported an all-time record in revenue from its services division, which includes offerings such as Apple Pay and Apple News.
