As Big Tech companies pour billions into artificial intelligence, Apple is proving that its most important product—the iPhone—still has the power to dominate. The company delivered a blowout earnings report on Thursday, far exceeding Wall Street expectations, thanks largely to the runaway success of the iPhone 17.
Apple reported quarterly revenue of $143.8 billion, a sharp increase from $124.3 billion during the same period last year. The iPhone once again carried the business, generating $85.3 billion in revenue—well above analysts’ forecasts of $78.2 billion. The results reflect the first full quarter of availability for the iPhone 17, which launched in September and quickly became one of Apple’s strongest-selling models in years.
The stakes were particularly high heading into the quarter. Apple has faced growing criticism for lagging behind competitors like Microsoft, Google, and OpenAI in artificial intelligence. With AI excitement reshaping the tech landscape, pressure mounted on Apple’s core hardware business to deliver—and it did.
CEO Tim Cook told analysts that demand for the iPhone 17 exceeded expectations. “The demand for iPhone was simply staggering,” he said, highlighting record upgrade rates and strong momentum among users switching from Android devices.
Record Device Growth and a China Comeback
Apple also revealed a major milestone: there are now 2.5 billion active Apple devices in use worldwide. That growing ecosystem continues to be a crucial advantage for the company, driving upgrades, services revenue, and long-term customer loyalty.
Perhaps most notable was Apple’s resurgence in China, a market where it has struggled amid local competition and economic pressures. Revenue in the region climbed to $25.5 billion, up from $18.5 billion a year earlier. The rebound suggests renewed interest in Apple’s premium devices, even as Chinese smartphone brands aggressively compete on price and features.
Cook credited the strong performance to both new buyers and returning customers, noting double-digit growth among users switching to the iPhone for the first time.
A Rebound After a Difficult Year
The earnings report marks a turning point after a challenging 2025 for Apple. The company spent much of last year navigating tariff-related pressures and dealing with backlash over the delayed rollout of a revamped version of Siri. Cook confirmed on the call that the long-awaited Siri upgrade is expected to arrive later this year.
In a significant development, Apple recently announced a partnership with Google, under which Google’s AI and cloud technology will help power Apple’s AI models, including the upcoming version of Siri. The collaboration signals a strategic shift as Apple accelerates its AI roadmap rather than building everything entirely in-house.
Cook described the deal as a “collaboration” and said Apple is “very happy” with the arrangement, though he declined to provide additional details.
Supply Constraints and Lingering Risks
Despite the strong results, Apple faces notable challenges ahead. The broader tech industry is experiencing a memory shortage, as manufacturers prioritize producing memory components for data centers and AI infrastructure instead of consumer devices like smartphones.
Cook acknowledged that Apple is currently “constrained” by supply issues and said it remains difficult to predict when supply and demand will fully balance. While the shortage had only a minimal impact on the December quarter, Cook warned it could become more noticeable in the current period.
There are also early signs of uneven demand within the iPhone lineup. While the iPhone 17 models have performed strongly overall, demand for the iPhone Air has been softer, according to data from Consumer Intelligence Research Partners.
The AI Question Still Looms
Even with blockbuster iPhone sales, Apple continues to face questions about its long-term AI strategy. Rivals are rapidly monetizing AI through enterprise tools, cloud services, and subscription models, while Apple’s approach remains more cautious and tightly integrated into its ecosystem.
When asked when Apple expects to generate revenue directly from AI, Cook said that artificial intelligence “opens up a range of opportunities” across Apple’s products and services. Rather than positioning AI as a standalone product, Apple appears focused on weaving it into existing experiences—an approach consistent with its historical strategy.
For now, the message from Apple’s latest earnings is clear: while AI may define the future of tech, the iPhone still defines Apple. And with the iPhone 17 firing on all cylinders, Apple has reminded Wall Street that its core business remains as powerful as ever.
