Apple closed its fiscal 2025 with record annual net income of $112 billion, marking a dramatic turnaround for a company that faced questions about its future just months ago. The tech giant’s Thursday earnings report showed revenue of $102.5 billion for the September quarter, but it’s the forecast for the holiday season that has investors excited.
Chief Financial Officer Kevan Parekh said the company expects total revenue growth of 10 to 12 percent in the December quarter, with iPhone sales rising by double digits. That projection significantly exceeds Wall Street’s more conservative estimate of 6 percent growth, suggesting Apple might be entering a genuine upgrade cycle after years of slower device replacements.
The optimism stems from early reception to the iPhone 17, which launched in September with a strategy that surprised many analysts. Apple held prices steady despite facing $1.1 billion in tariff costs during the last quarter, and it added more features to base models rather than reserving them exclusively for premium versions. That approach appears to be working.
Research from Counterpoint showed sales of the iPhone 17 models outpacing last year’s iPhone 16 by 14 percent in the United States and China during the first ten days. Those numbers matter because they come from two markets where Apple has faced distinct challenges. China has seen intense competition from local brands like Huawei, while American consumers have become more cautious about upgrading expensive devices.
CEO Tim Cook told Reuters the company struggled to meet demand for several iPhone 17 models during the fiscal fourth quarter, with supply constraints affecting both new and older models. He described the situation as a good problem to have, though it means Apple is racing to fulfill orders heading into its most critical selling period.
The earnings call also provided a reality check on China, which remains essential to Apple’s global strategy. Revenue from Greater China fell to $14.49 billion, below analyst expectations of $16.24 billion. However, Cook, who visited China earlier this month, expressed confidence about returning to growth in the December quarter. He noted store traffic has increased significantly compared to last year, suggesting consumer interest remains strong even if recent sales don’t fully reflect it.
Regulatory delays affected the iPhone Air’s launch in China, with the ultra-thin model not shipping until October 22 due to its e-SIM only design. Cook identified this delay as the primary reason for China’s sales contraction, rather than any fundamental weakness in demand. The iPhone Air, which represents Apple’s biggest design overhaul in years, has generated curiosity but limited concrete sales data so far.
Beyond hardware, Apple’s services division continued delivering consistent results. Services revenue reached $28.75 billion, exceeding estimates of $28.17 billion. This high-margin segment, which includes the App Store, iCloud, Apple Pay, and various subscriptions, provides stability that balances the cyclical nature of device sales. For the full fiscal year, services revenue surpassed $100 billion for the first time.
Mac sales showed strong 13 percent growth to $8.72 billion, which Cook attributed largely to the MacBook Air refresh in March that included a $100 price cut. iPad sales came in at $6.95 billion, relatively flat as the quarter didn’t include any major new models. The accessories business, covering AirPods and Apple Watch devices, generated $9.01 billion.
Tariffs remain a persistent concern. The company expects $1.4 billion in tariff-related costs during the December quarter, despite maintaining gross margins between 47 and 48 percent. These costs stem from products manufactured in China and imported to the United States, reflecting broader trade tensions that have affected tech supply chains throughout the year.
The timing of the earnings release coincided with a meeting between President Trump and Chinese President Xi Jinping, where Trump announced he would cut the fentanyl-related tariff on Chinese goods from 20 percent to 10 percent. Cook said he felt very encouraged by this development, which could provide modest relief on manufacturing costs going forward.
Apple’s market capitalization hit $4 trillion earlier this week, making it the third company ever to reach that milestone after Nvidia and Microsoft. The stock has climbed more than 30 percent since August, recovering from a significant drop in April when Trump launched a global trade war that threatened Apple’s vast supply chain. Thursday’s results reinforced investor confidence that device demand reflects genuine consumer appetite rather than panic buying ahead of tariff increases.
Artificial intelligence remains Apple’s most visible challenge relative to Big Tech competitors. The company has struggled with product execution in this area, from delayed Siri updates to bugs that forced it to roll back a news summary feature. Parekh noted the company is significantly increasing investments in AI research and development, driving operating expenses up 11 percent in the last quarter. However, Apple hasn’t matched the AI excitement generated by Microsoft’s partnership with OpenAI or Google’s integration of AI across its product suite.
Despite these AI headwinds, Apple’s performance suggests consumers still prioritize hardware quality, ecosystem integration, and reliable software over cutting-edge AI features. The iPhone 17’s success comes primarily from improved cameras, faster processing, and refined design rather than any breakthrough AI capabilities. That’s a reminder that while investors obsess over AI potential, most consumers make buying decisions based on more tangible factors.
The company’s installed base of active devices reached a new all-time high across all product categories and geographic segments, according to Parekh. This metric matters because it indicates Apple isn’t just selling devices but keeping users engaged within its ecosystem. Each additional device or service subscription increases switching costs, making it harder for competitors to pull customers away.
Looking ahead, Apple will need to execute on several fronts simultaneously. It must ramp production to meet iPhone 17 demand while navigating tariff uncertainties and geopolitical tensions. It needs to demonstrate meaningful AI progress to satisfy investors who worry it’s falling behind. And it has to maintain momentum in China despite regulatory challenges and fierce local competition.
The company reported earnings per share of $1.85, above the $1.77 Wall Street expected. For the full fiscal year ending September 27, Apple recorded $416.2 billion in sales and $112 billion in net income, compared to $391 billion in sales and $93.7 billion in net income for fiscal 2024. Both figures set all-time records.
Apple shares rose 2.3 percent in after-hours trading following the announcement, suggesting investors believe the company can deliver on its ambitious holiday forecast. Whether that optimism proves justified will depend largely on how many consumers decide the iPhone 17 offers enough improvements to justify an upgrade. Early signs point to yes, but Apple’s real test comes in the next three months when holiday shopping reaches its peak.
