Apple’s iPhone Surge: A Holiday Win and Beyond
Welcome, listeners, to another deep dive into the world of tech and finance. Today, we’re unpacking a big story fresh off the press: Apple’s latest earnings report. If you’ve been watching the markets, you might’ve noticed Apple shares climbing about 3.5% in after-hours trading, though they did peak at nearly 5% during the earnings call before cooling off a bit. But let’s cut to the chase—why are investors buzzing, and what does this mean for Apple’s trajectory as we head into the holiday season and beyond? Grab your coffee, settle in, and let’s break this down.
The headline here is all about the iPhone. Going into this earnings report, all eyes were on Apple’s flagship product, especially with whispers of supply chain hiccups and questions about demand. For the September quarter, Apple reported iPhone growth of 6%, which, frankly, missed the mark—analysts were hoping for 9%, and some even whispered 10%. A bit of a letdown, right? But here’s where the story gets juicy: Apple’s guidance for the December quarter—the all-important holiday season—was a stunner. They’re projecting double-digit growth, potentially around 12% or higher, compared to Wall Street’s modest expectation of 6%. That’s a bold signal of confidence, and it’s why the stock popped after hours. Investors are betting that Apple is poised to crush it when holiday shopping kicks into high gear.
Now, let’s peel back the layers on why this mismatch between quarters happened. It’s not about weak demand—quite the opposite. Apple’s dealing with supply constraints, with lead times for iPhones running about 15% longer this year compared to last. Simply put, they couldn’t keep up with orders in September, so a chunk of that revenue is getting pushed into December. If you zoom out and look at these two quarters combined, the picture gets clearer. Had Apple hit the whispered 10% growth in September and maintained a 6% uptick in December, they’d be looking at roughly $124 billion in revenue. But with the actual 6% in September and a projected 12% in December, that total jumps to around $126 billion—a modest but meaningful bump. It’s a classic case of delayed gratification, and the market seems to be rewarding Apple for the promise of a strong holiday payoff.
But there’s a bigger narrative at play here, and it’s about the iPhone’s resurgence. Over the past three quarters, including this December guidance, Apple is on track to grow iPhone sales by about 10% each quarter. Compare that to the previous three years, where growth averaged a measly half a percent decline, and you’ve got a notable turnaround. Part of this is tied to a new product cycle, sure, but there’s also a fascinating tailwind: a massive upgrade wave from 2021, when iPhone sales soared nearly 40%. People tend to hold onto their phones for about four years, so we’re now hitting that sweet spot where those older devices are begging for a refresh. I thought last year might’ve been the big upgrade year, but it seems the momentum is finally kicking in now—and it could carry Apple through the next few quarters.
Shifting gears for a moment, let’s talk about another bright spot: Apple’s services business. It grew 15% year-over-year, beating expectations of 13%, thanks to a steadily expanding base of active devices hitting a new high. What’s striking is that half of Mac, iPad, and wearable customers are new to Apple. That’s right—Apple is still drawing in fresh faces, and these newcomers aren’t just buying one product; they’re diving into the ecosystem, snapping up hardware and subscribing to services. This segment, which makes up about 20% of revenue, remains a rock-solid growth engine, providing stability even when hardware sales fluctuate.
And we can’t ignore the AI elephant in the room. Apple’s CEO hinted at a revamped Siri launching next year, likely in the early months—think late March or April. The bar for Apple in the AI space has been frustratingly low; let’s be honest, they’ve lagged behind competitors in this arena. But that’s exactly why there’s so much upside potential. Investors are already starting to price in excitement for what Apple might unveil with “Apple Intelligence” and other innovations, possibly even a foldable phone in the latter half of 2025. The psychology around the stock feels poised to shift upward as anticipation builds.
So, what’s the takeaway for us as we head into the end of the year? Apple’s fundamentals look strong. The iPhone, their core engine, is revving up thanks to supply catching up with demand and a timely upgrade cycle. Services continue to be a steady cash cow, and the promise of AI-driven features could reignite investor enthusiasm. Sure, there are still questions—like whether supply constraints will fully ease by the end of December—but history suggests Apple will hit a supply-demand balance soon. For now, the holiday quarter looks like a win, and the road ahead seems paved with opportunity. That’s the story from Cupertino, and I’m thrilled to see how it unfolds. Thanks for tuning in, and let’s keep the conversation going next time.