Investing.com -- Apple unveiled a current-quarter revenue outlook in the low- to mid-single-digits, missing the top-end of Wall Street estimates, in a possible sign of caution ahead of the key holiday trading period.
The company added that it expects to see double-digit growth in its services unit in the fiscal first quarter, a statement that prompted some analysts to ask if that means hardware sales could drop during the period. Apple (NASDAQ:AAPL) executives did not specifically speak to this question, although CEO Tim Cook said customers are downloading the new artificial intelligence-enhanced version of the iPhone's operating system twice as fast as they had a year earlier.
Cook said the feedback from consumers and developers about the firm's "Apple Intelligence" AI features has been "great." Strategists have speculated that Apple Intelligence could drive a wave of iPhone users moving to upgrade older devices, potentially reinvigorating recently tepid demand.
Sales of the iPhone were $46.2 billion, up from $43.8 billion a year ago. Demand in China in particular came in flat, improving from decreases over the prior two quarters, thanks to easing foreign exchange headwinds and an expanding user base.
Meanwhile, sales at Apple's services unit, a businesses that houses its Apple Pay and App Store offerings, increased by around 12% year-on-year to $24.9 billion.
Shares in Apple edged lower in premarket US trading on Friday, even though its fourth-quarter results still topped projections.
When excluding a one-time multi-billion euro charge from a European tax payment, diluted earnings per share came in at $1.64 on revenue of $94.93 billion, compared with forecasts of $1.60 and $94.4 billion, respectively. Including the charge, diluted per-share income was $0.97.
"Taking a step back, we don't think tonight's results change much of the debate, as bulls [...] will continue to point to the potential for a major upgrade cycle [...], while bears will say the stock remains expensive on [fiscal year 2025] numbers," analysts at Morgan Stanley said in a note.
The results come amid a week of mixed results from Apple's Big Tech peers. Investors cheered figures from Google-owner Alphabet (NASDAQ:GOOGL) and e-commerce giant Amazon (NASDAQ:AMZN), but worries around huge spending on AI still clouded returns from software giant Microsoft (NASDAQ:MSFT) and Facebook-owner Meta Platforms (NASDAQ:META). With the tech industry's largest players currently engaged in a race to build out their AI capabilities, some traders have begun to raise concerns over when the soaring expenditures will yield a pay out and how these costs could impact recently sizeable margins.
(Yasin Ebrahim contributed reporting.)