New York — In a pivotal announcement last month, Apple CEO Tim Cook introduced the iPhone 16, highlighting its groundbreaking Apple Intelligence AI capabilities, which he claimed would “supercharge” the device. Now, the tech world has its first insights into the impact of Apple’s artificial intelligence integration on iPhone sales, as the company released its latest earnings report on Thursday.
According to the figures, iPhone sales reached $46.2 billion for the three months ending in September, marking a significant 5.5% increase over the previous year. While modest, this boost exceeded analysts’ expectations, signaling a promising response to the iPhone 16, especially given the tough market conditions Apple has faced recently.
The timing of this report is crucial: Apple’s third-quarter earnings capture a snapshot of just over two weeks of iPhone 16 sales since preorders began on September 13, with devices officially available in stores on September 20. Though these figures represent only the early days of what Apple hopes will be a “supercycle” of demand for the iPhone 16, they nonetheless offer an initial indicator of interest for a model the company is counting on to revitalize sales amid a challenging period. Apple has reported year-over-year revenue declines in four consecutive quarters, partly due to sluggish iPhone demand and the broader economic uncertainties that have impacted tech spending globally.
For years, Apple has struggled to provide a compelling reason for consumers to upgrade their devices as frequently as they once did. Now, some analysts are optimistic that Apple Intelligence—a software upgrade that integrates artificial intelligence throughout the iPhone 16—could be the key to sparking renewed enthusiasm among Apple’s vast user base. The third-quarter figures also reflect sales of older iPhone models during the period, but the incremental uptick suggests that the new model may be giving Apple’s iPhone lineup the lift it needed. In comparison, the launch of the iPhone 15 saw a smaller growth of just 2.8% year-over-year.
The resurgence in iPhone sales also contributed to an overall revenue increase of 6% for the company, bringing in $94.9 billion, which was slightly above analyst projections. However, the surge in revenue was tempered by a decline in profits, which fell by 35% from the same period last year.
During the earnings call on Thursday, Cook highlighted the early enthusiasm for Apple Intelligence. “(iOS) 18.1 has twice the adoption rate of (iOS) 17.1,” he said, indicating substantial interest among users. However, despite these positive signs, Apple shares saw a slight dip of around 1% in after-hours trading.
This earnings report coincides with the release of the first wave of Apple Intelligence features, available not only on the iPhone 16 but also on select models of the iPhone 15 Pro. Among the new AI tools are advanced writing aids and functionalities that allow users to record, transcribe, and summarize phone calls—capabilities many consumers find highly appealing. However, buyers of the iPhone 16 did not have access to these features at launch, as Apple released them only recently, possibly dampening the initial rush to upgrade.
More Apple Intelligence features are set to be released with iOS 18.2 in December, meaning that consumers may have initially held back on purchasing the iPhone 16, knowing that further updates are on the horizon. This staggered release strategy may have tempered early demand for the device.
As Wall Street closely examined Apple’s third-quarter earnings, the primary focus was on how the iPhone 16 cycle is performing, and particularly on Apple’s projections for the fourth quarter. In anticipation of the report, CFRA Research analyst Angelo Zino noted in a statement that the focus would likely remain on early performance indicators for the iPhone 16 as well as Apple’s upcoming sales targets.
In his statement on Thursday, Cook emphasized Apple’s commitment to privacy in AI, stating that Apple Intelligence “sets a new standard for privacy in AI and supercharges our lineup heading into the holiday season.” He also underscored the role of AI-enhanced products in attracting consumers as the company enters its crucial holiday quarter.
Another focal point for analysts has been Apple’s performance in China, a vital market for the company where it has faced fierce competition from domestic brands. Earlier this year, Apple lowered its prices in China in response to this competition, but it’s clear that Apple’s strategy to regain ground with the iPhone 16 is still developing. Although third-quarter sales in China approached $15 billion, they fell short of the anticipated $16.1 billion analysts had predicted, underscoring the hurdles Apple faces in this critical market.
Most analysts, however, remain cautiously optimistic about the broader outlook. They acknowledge that September’s figures were a partial preview, with the real test for iPhone sales coming in the holiday quarter. Wedbush analyst Dan Ives noted in a recent report that an estimated 300 million iPhones worldwide haven’t been upgraded in over four years, predicting that Apple could be on the cusp of a significant sales surge.
Following Thursday’s earnings, Emarketer analyst Jacob Bourne pointed out that while the gradual rollout of Apple Intelligence features might slightly dampen the upgrade momentum, the combination of robust services revenue and healthy demand for the iPhone 16 has Apple well-positioned for a strong performance as the holiday season approaches.
