Apple CEO Tim Cook promised that the new Apple Intelligence AI tools would “supercharge” the iPhone 16 when he introduced it last month. A month later, we’re getting a glimpse of how Apple’s artificial intelligence integration has affected iPhone sales.
For the three-month period ending in September, Apple reported iPhone sales of $46.2 billion, a 5.5% increase compared to the previous year, slightly surpassing analysts’ expectations. However, these figures reflect only the first two weeks of sales for the iPhone 16, which officially launched on September 20, following preorders on September 13. While this represents only a small portion of the device’s total lifetime sales, it offers an early indication of demand for a product Apple hopes will revive its sales slump.
Apple’s overall revenue declined year-over-year for four straight quarters, mainly due to weak iPhone demand and broader economic uncertainty. Analysts believe that Apple Intelligence, which adds AI features throughout the iPhone 16, could spark the sales surge the company is desperately seeking.
The third-quarter iPhone sales numbers also include sales of earlier iPhone models, but they suggest the iPhone 16 has contributed to a slight sales boost. In the same quarter last year, when the iPhone 15 launched, iPhone sales grew by only about 2.8%.
This growth helped drive Apple’s total revenue up by 6% year-over-year to $94.9 billion, exceeding analyst expectations, although profits fell by 35% compared to the prior year.
During the earnings call, Cook highlighted the success of Apple Intelligence, saying, “iOS 18.1 has twice the adoption rate of iOS 17.1,” reflecting strong consumer interest.
Apple’s stock (AAPL) dropped about 1% in after-hours trading following the report.
The report comes after Apple launched its first Apple Intelligence features for the iPhone 16 and iPhone 15 Pro models this week, including new writing tools and the ability to record, transcribe, and summarize calls. However, early iPhone 16 buyers didn’t have access to these features until recently.
The phased rollout of new AI capabilities, with more expected in December with iOS 18.2, may explain why there wasn’t a greater sense of urgency to upgrade to the iPhone 16 in the initial month of sales.
Ahead of the earnings report, Wall Street investors were focused on “early indicators of how the iPhone 16 cycle is performing” and Apple’s sales outlook for the fourth quarter, according to CFRA Research analyst Angelo Zino.
In a statement, Cook described Apple Intelligence as “setting a new standard for privacy in AI,” and said it would help “supercharge” the company’s lineup for the holiday season.
Investors were also watching sales figures from China, one of Apple’s most important markets. Apple had lowered prices in China earlier this year due to fierce competition from local rivals, but analysts hoped the iPhone 16 could help drive a recovery, despite challenges in rolling out AI features in the region.
Sales in China were roughly flat year-over-year at just over $15 billion for the third quarter, falling short of analysts’ expectations of $16.1 billion, according to Refinitiv estimates.
Many analysts weren’t overly concerned with the September sales numbers, as the key period for Apple is always the upcoming holiday season.
Wedbush analyst Dan Ives pointed out that around 300 million iPhones globally have not been upgraded in more than four years, suggesting a “huge holiday season” ahead.
Following Thursday’s earnings report, Emarketer analyst Jacob Bourne noted that while the gradual rollout of Apple Intelligence could dampen the momentum of device upgrades, strong services revenue growth and solid demand for the iPhone 16 position Apple well for the busy holiday season.
