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Apple’s iPhone sales to dip in Q2, AI strategy key to future growth

Apple is likely to report a decline in iPhone sales in the April-June quarter as buyers look for new models in a slowing economy, making it important for the company to reveal what it is looking to boost growth. How to use artificial intelligence. , analysts said.

Big Tech, the world’s most valuable company, will miss earnings Thursday with overall quarterly revenue expected to decline 1.6% — its biggest decline in third-quarter revenue since 2016, according to Refinitiv.

iPhone sales are expected to decline more than 2% in the period, compared with growth of about 3% a year ago and 1.5% growth in the quarter ended March, according to 24 analysts polled by Visible Alpha. Had happened.

The quarterly report could signal a break from an upbeat earnings season for companies such as Meta Platforms, Alphabet and Microsoft, which have shown resilience in their cloud businesses and booming digital advertising sales.

“Apple is not insulated from general macroeconomic trends and will continue to set the pace (for the smartphone industry) for quite some time,” said Bob O’Donnell, founder of Technalysis Research.

With details about the new iPhone 15 coming next month — which may have a more universally accepted USB-C port on some models — iPhone sales in the July-September quarter could be down slightly, analysts said. who have predicted a mixed run of results for the period.

Apple traditionally doesn’t provide a quarterly outlook, but analysts expect the company to detail how it’s using AI to improve its upcoming products.

Unlike tech giants including Alphabet and Microsoft, the company has so far avoided buzzwords like AI at its events. Last month, Bloomberg News reported that Apple has quietly built its own framework for building large language models known as “Ajax”.

“We expect the updated comments to focus on Apple’s AI aspirations,” Well Fargo analysts wrote in a research note. He added that any commentary around the technology could boost the stock.

Apple shares are up more than 50% so far this year, while the tech-heavy Nasdaq Composite is up nearly 37%.

iphone slow
Analysts say much of the weakness in iPhone sales is expected to come from the US, where revenue is set to decline by 6%. Sales in China – Apple’s third biggest market – are expected to be flat due to an uneven economic recovery, although the company has fared better than Android rivals in the country.

Total smartphone shipments in China declined by 2.1% in the second quarter, according to market research firm International Data Corp.

Piper Sandler said, “Most investors believe China’s soft stance could pose a risk to the data and forward-looking comment, but Apple’s position in China remains strong and the company is expected to see a slight decline in iPhone sales.” can be found.” analysts said.

“If there is any weakness in sales from China, it is likely to be easily offset by strong sales momentum in India,” he added.

Mac and iPad sales are expected to decline by 10.6% and 11.2%, respectively, according to Refinitiv data.

But the services business — home to Apple’s App Store and audio and video streaming services — could be a bright spot because of a booming advertising market, some analysts said.

The business, which accounts for about a quarter of Apple’s total revenue, is expected to grow 5.7% as it also benefits from price increases for iCloud subscriptions, though the pace is roughly the same as the previous three quarters. Reuters

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