Strong iPhone sales fueled Apple's fiscal Q3 with revenue expansion at its greatest scale since 2021
Apple has reported impressive financial results for its third quarter of 2023, with a revenue growth of 9.7% year-over-year (YoY), marking its highest growth since the pandemic-era sales boom of late 2021. The tech giant's fiscal third quarter revenue reached an impressive $94.04 billion, according to the financial results announced by CEO Tim Cook.
The iPhone, as always, anchored the business, accounting for nearly half of Apple's total revenue. Sales of the iPhone 16 significantly outperformed last year's version, especially among existing customers, with sales of $44.58 billion, a 13% YoY increase.
Apple's Services revenue continues to stretch its influence, reaching an all-time high of $27.42 billion, driven by rising iCloud subscriptions and steady gains on the App Store. The Mac business also saw a 15% growth to $8.05 billion, thanks to new MacBook Air models. However, iPad sales fell by 8% to $6.58 billion. The wearables category (Apple Watch and AirPods) dropped to $7.4 billion.
The revenue growth was aided by strong growth in China, contributing to Apple's overall revenue and growth. Sales in China grew by 4% to $15.37 billion. Gross margins held steady at 46.5%. Earnings per share were $1.57 for the quarter.
In line with its record financial results, Apple is planning to significantly expand its AI investments across its products and platforms. Tim Cook announced during the financial results that the company is reallocating internal teams to focus on AI features and is open to acquisitions that accelerate its AI roadmap, having acquired around seven companies this year, some related to AI.
Apple sees AI as one of the most profound technologies of our lifetime that will impact all its devices significantly. The company is enhancing AI integration by making Siri more personal and investing in on-device intelligence, aiming to improve both user privacy and device performance. Apple is also investing in AI-related infrastructure, including servers using its own chips under the "Private Cloud Compute" initiative to support its AI growth.
This broad AI push aligns with the company’s strategy to grow services and hardware innovation fueled by AI. Apple expects mid-to-high single-digit gains and healthy margins in the current quarter. However, the company expects to spend $1.1 billion on tariffs in the next quarter, following the $800 million spent this quarter.
Net profit for the quarter climbed from $21.45 billion to $24.43 billion, an increase of 14% YoY. With its AI-driven strategy, Apple is poised to continue its growth trajectory and enhance user experience, privacy, and performance across its product line.
- The strong financial results reported by Apple were partly due to the impressive sales of smartphones, particularly the iPhone 16, which accounted for a 13% YoY increase in revenue.
- As part of its AI-driven strategy, Apple is reallocating internal teams to focus on AI features and is open to acquisitions that accelerate its AI roadmap, indicating a significant expansion of AI investments across its products and platforms.
