iPhone sales hit record high despite Apple’s AI setbacks

In its quarterly results released Thursday, Apple reported iPhone revenue of $85.3 billion, up 23 percent from a year earlier and the highest ever for the device in a three month period since its launch in 2007. The strong performance came even as Apple has yet to deliver on its pledge to enhance Siri with advanced AI features in 2024.

To help drive demand, Apple introduced a new “liquid glass” design across the iPhone 17 series and older models through a free software update released last September. That strategy appeared to resonate with consumers during the peak shopping season.

“The demand for iPhone was simply staggering,” Chief Executive Officer Tim Cook said during a conference call with analysts, expressing confidence that the iPhone will evolve into a leading platform for artificial intelligence.

The surge in iPhone sales helped Apple post quarterly profits of $42.1 billion, or $2.84 per share, marking a 16 percent increase from the same period last year. Overall revenue rose 16 percent to $143.8 billion, with both earnings and sales beating Wall Street expectations.

Apple’s shares rose about 1 percent in after hours trading following the announcement, although the stock remains slightly lower so far this year and only modestly above its level at the end of 2024.

Analysts said concerns over Apple’s slower entry into AI may have been overstated. Ethan Feller of Zacks Investment Research said Apple now appears well positioned to expand AI features across its ecosystem, which includes iPads, Mac computers and smartwatches. Apple said more than 2.5 billion active devices worldwide currently run on its operating systems.

Looking ahead, Apple plans to release a long delayed batch of AI tools, including an upgraded version of Siri designed to be more conversational and flexible. To support this push, the company is turning to Google’s latest AI model, Gemini 3, in a rare acknowledgment that it needs outside help in a technology seen as the industry’s most significant advance since the iPhone itself.

Despite its AI challenges, the iPhone ended last year as the world’s top selling smartphone with nearly 20 percent market share, narrowly ahead of Samsung, according to International Data Corp.

Apple also issued an upbeat forecast, saying revenue in the January–March quarter is expected to rise by at least 13 percent year on year, surpassing analysts’ expectations of about 10 percent growth.

However, the AI boom is creating fresh pressure for Apple, particularly from a global shortage of memory chips used in smartphones and laptops. Intense demand from data centers powering AI services is pushing up chip prices, squeezing Apple’s profit margins and raising the possibility of higher prices for iPhones and other products, reports UNB. 

“We do continue to see market pricing for memory increasing significantly,” Cook told analysts, adding that the company is evaluating multiple options to manage the rising costs.