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Apple forecasts record holiday quarter despite iPhone supply constraints
Apple anticipates its strongest quarter ever this holiday season, with revenue projected to rise by up to 12% year-over-year, CEO Tim Cook announced during the company's fourth-quarter earnings call on Thursday. The tech giant reported $102.5 billion in revenue for the quarter ending in September-a 8% increase from 2024-though iPhone sales fell slightly short of expectations at $49 billion, a shortfall attributed to supply chain disruptions and delayed shipments to China.
New iPhone models drive demand despite challenges
Cook highlighted robust global demand for the recently launched iPhone 16 and iPhone 17, as well as the ultra-thin iPhone Air, unveiled in September. While supply constraints impacted fourth-quarter performance, the CEO emphasized that Apple's current product lineup is its "most powerful ever" ahead of the critical year-end shopping period.
"We're not predicting when supply and demand will balance," Cook admitted, "but we're working hard to meet customer demand." He noted particular strength in China, where the iPhone 17 has seen "tremendous response," citing data from Counterpoint Research showing a 14% sales increase in the first 10 days compared to the iPhone 16's launch in the U.S. and China.
Tariffs weigh on profits amid trade tensions
Apple's financials also reflected the impact of U.S. tariffs on Chinese-made goods, with Cook revealing a $1.1 billion hit in the last quarter alone. The company expects an additional $1.4 billion in tariff-related costs during the holiday season as trade policies tighten. The ongoing U.S.-China trade friction-exacerbated by former President Donald Trump's tariffs-remains a key risk, though recent diplomatic talks between Trump and Chinese President Xi Jinping have raised hopes of eased tensions.
"We're encouraged by the start of the peak season," Cook said, though he acknowledged the "significant" financial burden of tariffs on Apple's global supply chain.
Cloud growth at Amazon underscores AI competition
Apple's earnings report coincided with Amazon's third-quarter results, where the e-commerce giant forecast holiday sales between $206 billion and $213 billion, aligning with analyst expectations. A standout performer was Amazon Web Services (AWS), which saw a 20% year-over-year revenue jump-its fastest growth since 2022-driven by AI and infrastructure demand.
The contrast underscores Apple's lag in the AI race, as rivals like Microsoft and Alphabet double down on cloud and AI investments. Amazon CEO Andy Jassy emphasized the company's focus on "accelerating capacity" to meet AI-driven demand, a sector where Apple has yet to match the aggressive spending of its competitors.
Outlook: Holiday optimism tempered by supply risks
Despite supply challenges, Apple's CFO Kevan Parekh told analysts that meeting the holiday forecast would mark the company's "best quarter ever." The company's ability to navigate tariffs, supply constraints, and intensifying AI competition will be critical in the months ahead.
Investors will watch closely as Apple aims to capitalize on holiday demand while mitigating external pressures-from trade policies to the need to close the AI gap with its Big Tech peers.
