In what is usually the most difficult quarter for iPhone sales, with the spectre of the traditional September refresh looming large, Apple has still reported third-quarter earnings higher than expectations. The company has reported quarterly revenue of $94 billion, up 10 percent year over year, a June quarter revenue record, and beating $89.3 billion expectations. Apple CEO Tim Cook again emphasised the importance of India, for Apple’s growth trajectory.
“We saw iPhone growth in every geographic segment and double-digit growth in emerging markets including India, the Middle East, South Asia, and Brazil. Mac continued to see excellent results with revenue up 15% year-over-year, and we set another all-time revenue record in Services which grew 13% with double-digit growth in both developed and emerging markets,” said Cook, during the quarterly earnings call.
iPhone sales grew 13% year on year, while the overall revenue growth of 10% marks this as the sharpest growth since the quarter of December 2021. Apple notes the popularity of the iPhone 16 models — the iPhones collectively taking in $44.58 billion in sales. The Mac product line grew 15%, the fast among all of Apple’s businesses in this quarter, at $8.05 billion in revenue.
“We saw an acceleration of growth around the world in the vast majority of markets we track, including greater China and many emerging markets, and we had June quarter revenue records in more than two dozen countries and regions, including the U.S., Canada, Latin America, Western Europe, the Middle East, India, and South Asia. These results were driven by double-digit growth across iPhone, Mac, and services,” Cook also noted strong performance across Apple’s product lines, in many countries.
The services business, which includes App Store, iCloud, Apple Music and the company’s search agreement with Google, also grew 13% in the quarter, with $27.42 billion in revenue.
Apple however didn’t find the same level of success with the iPad and Accessories lines — revenue for iPad down 8% to $6.58 billion, while the revenue from Apple Watch and AirPods slipped from 8.64% to $7.4 billion this past quarter.
The AI piece of the jigsaw
In the quarterly earnings call, Cook said that Apple would “significantly grow” its AI investments in the coming quarters, which could signify the company’s plans for mergers and acquisitions as a way to speed up the Apple Intelligence plans.
“We are significantly growing our investments. We’re embedding it across our devices, across our platforms and across the company,” Cook said regarding Apple Intelligence, the company’s artificial intelligence suite that finds home in iOS, iPadOS and macOS, competing with Google Gemini and Microsoft Copilot integrations, as well as the likes of OpenAI, Anthropic and Perplexity.
The question is, will Apple open the chequebook for acquiring an AI company in the coming quarter, particularly timed with the release of the next line of iPhones and the iOS 26 software, considering the importance of that product line for Apple’s revenue targets? There is the aspect of the long-delayed smarter Siri, as well as competition from Google Gemini on Android, and OpenAI as well as Perplexity’s deals with phone makers for specific integrations — the latter has a deal in place with Samsung, for instance.
But which AI companies could Apple consider acquiring, which would significantly improve Apple Intelligence? There have long been whispers about Perplexity and Mistral, but nothing has been officially confirmed. Cook has often referred to AI as the “most profound technology of our time”, and Apple presently integrates OpenAI’s GPT models as part of the Apple Intelligence suite with focus on the present iteration of Siri.
