Apple Sales Surge Amid AI Investments as Markets React
Apple’s sales experienced a significant rebound this spring, counteracting a slowdown in China and a decrease in iPhone sales, providing a glimmer of hope for the unsettled financial markets. The tech behemoth announced revenues of $85.8 billion (£67.3 billion) for the quarter ending in June, marking a 5% increase year-on-year, signaling a return to growth after a sluggish start to 2024.
Despite this positive report, the major US stock indexes closed lower, with post-market trading seeing investors offloading major stocks, including Amazon. Intel’s shares plummeted by over 19% as the chip manufacturer responded to a downturn in sales with a significant cost-cutting strategy that includes over 15,000 job cuts.
Amazon’s stock also fell by more than 4% following its announcement of a 10% sales growth to $148 billion. This growth represented a deceleration from the previous quarter, and the company projected further weakening in the coming months, putting pressure on profit margins even as it ramps up investments in artificial intelligence (AI).
Overall, the Dow Jones Industrial Average fell by 1.2%, the S&P 500 declined by nearly 1.4%, and the Nasdaq dropped by 2.3%. Recent weeks have seen markets in turmoil due to the heavy costs associated with AI investments, with firms lagging in the AI race facing harsh repercussions.
Intel has particularly suffered as businesses shift their focus to Nvidia, a leader in AI chip technology. Intel reported a 1% year-on-year decline in sales for the three months to June and warned that the latter half of the year would be more challenging than anticipated. CEO Pat Gelsinger emphasized the need for “bolder actions” and a fundamental change in operations due to the underperformance and missed opportunities in leveraging AI trends.
Conversely, Apple is poised to capitalize on these changes. The company highlighted AI-powered enhancements to its software that are prompting customers to upgrade their devices. Recently, Apple introduced several new features under the “Apple Intelligence” brand to US developers. These features enable iPhone users to easily record and transcribe phone calls, create personalized emojis in messages, and interact more naturally with Siri, among other improvements.
Apple plans to roll out these features more broadly later this year, but only on its latest devices. CEO Tim Cook expressed confidence in these innovations, stating that they offer “another compelling reason for an upgrade” and that the company expects continued growth in the coming months. “We remain incredibly optimistic about the possibilities of AI and will continue to make significant investments in this technology,” Cook said.
During the April to June period, iPhone sales dipped by 1%, but this decline was offset by increased sales of Macs and iPads. Additionally, Apple reported a record high in revenue from its services division, which includes Apple Pay and Apple News.
