Apple’s shares surge despite the largest China sales drop in one year

Apple reported earnings for the fiscal first quarter of 2025, showing that sales in China fell 11% from the same quarter in the fiscal year 2024. Despite this, Apple’s shares jumped more than 3% in after-hours trading. Investors are optimistic about its growth prospects in Apple Intelligence, while Apple’s diversified product range has contributed to overall revenue growth.

Apple remained the world’s largest company, with a market capitalisation of $3.58 trillion (€3.43 trillion), with its stock declining 4.56% this year as of market close on 30 January.

A record quarter

Apple’s overall sales rose by 4% to $124.30 billion (€119.2 billion) during the December quarter, which is a record quarterly number. The company also achieved a record profit, with earnings per share at $2.4 (€2.3), up 10% from a year earlier. The gross margin came in at 46.9%, compared with the estimated 46.5%. Apple expects continued growth of low to mid-single digits in the March quarter.

Additionally, Apple’s active devices have reached a record high of 2.35 billion globally, compared to 2.2 billion a year ago. CFO Kevan Parekh, said: “We are also pleased that our installed base of active devices has reached a new all-time high across all products and geographic segments.”

CEO Tim Cook indicated holiday shopping had supported sales: “We were thrilled to bring customers our best-ever lineup of products and services during the holiday season.”

However, sales of Apple’s biggest segment, the iPhone series, fell slightly from last year due to a sharp decline in Greater China. In other product categories, the new iPad and MacBook series have contributed to the overall growth, both of which saw a 15% increase in sales from last year. Meanwhile, sales of Apple Wearables, including Apple Watch, AirPods, Bests, and Apple Vision Pro, fell by 2% year on year.

Services revenue remained a bright spot, increasing 14% year on year. The division, which includes Apple TV+, iCloud, and App Stores, is a key driver for Apple’s profitability. The company expects Apple services to grow low double digits for the current quarter.

Ongoing weakness in China

Apple’s sales in Greater China, including mainland, Hong Kong, and Taiwan, declined 11.1%, making the largest drop since the same quarter in 2023. Greater China is Apple’s third largest market and recorded an annual sales decline throughout 2024, due to growing competition from local brands such as Huawei and Xiaomi, alongside overall sluggish consumer demand. “Ultimately, investors don’t have a very shiny Apple right now,” Josh Gilbert, a market analyst at eToro Australia wrote in a note.

The December quarter is the first full quarter following the launch of the iPhone 16 handset series, and the slowdown may also suggest that Apple Intelligence lagged behind other tech giants in rolling out its artificial intelligence-backed products.

During an interview with CNBC, Cook indicated that the decline in China was partly due to delays in launching Apple Intelligence, which is only available in some English-speaking regions. He noted iPhone 16 sales were better in countries with the AI software available compared with those where is not.

“Through the power of Apple silicon, we’re unlocking new possibilities for our users with Apple Intelligence, which makes apps and experiences even better and more personal. And we’re excited that Apple Intelligence will be available in even more languages this April,” he commented in the earnings report.