Apple CEO Tim Cook promises iPhone sales will rebound after AI features were slow to roll out

Core Viewpoint - Apple shares increased in after-market trading following a forecast of higher sales than Wall Street anticipated, indicating expectations for a recovery in iPhone sales driven by the rollout of artificial intelligence features [1][2]. Sales Forecast - Apple executives project sales for the current quarter to rise in the low- to mid-single digit range, surpassing the 5% increase to $95.3 billion expected by analysts after adjusting for a 2.5 percentage point impact from foreign exchange rates [2]. - The company's total sales for the fiscal first quarter reached $124.30 billion, slightly exceeding Wall Street's target of $124.12 billion, with earnings per share of $2.40 beating the consensus target of $2.35 [7]. iPhone Sales Performance - In the recently concluded fiscal first quarter, iPhone sales slightly declined to $69.14 billion, below the expected $71.03 billion, while Greater China sales fell to $18.51 billion, down from $20.82 billion a year earlier and below the anticipated $21.33 billion [5][6]. - CEO Tim Cook noted that the decline in China revenues was partly due to changes in inventory levels held by resellers [10]. AI Features Impact - The introduction of AI features, termed Apple Intelligence, is believed to be driving sales of new devices, with Cook stating that markets where these features have been rolled out saw stronger year-over-year performance for the iPhone 16 family [8][14]. - Apple is gradually rolling out AI capabilities, with plans to introduce them in new languages by April, although there is no timeline for availability in China [8]. Product Segment Performance - Sales of iPads and Macs exceeded expectations, with Mac sales benefiting from a new lineup featuring the M4 chip, reaching $8.99 billion, above the estimated $7.96 billion, while iPad sales hit $8.09 billion, surpassing the $7.32 billion estimate [11]. - The services segment, including iCloud and streaming services, generated $26.34 billion in sales, reflecting a 13.9% increase from the previous year and exceeding estimates of $26.09 billion [12]. - The wearables segment, which includes Apple Watch and AirPods, reported $11.75 billion in sales, slightly below analyst expectations of $12.01 billion [13]. Gross Margin Guidance - CFO Kevan Parekh indicated that gross margins for the current fiscal second quarter are expected to be between 46.5% and 47.5%, with the upper end exceeding estimates of 47.01% [4].