Apple Inc. reported a modest 4% rise in revenue for the first quarter, with earnings per share standing at $2.40. Despite achieving a revenue total of $124.30 billion, slightly surpassing Wall Street's anticipated $124.12 billion, the tech giant faced significant challenges in its key market, China. Notably, iPhone sales in China declined by 11.1%, contributing to a drop in the company's stock prices by approximately 8%. This decline has raised concerns among investors about Apple's performance in the world's largest smartphone market.
The fall in iPhone sales in China was a key factor in Apple missing Wall Street's expectations for iPhone revenue. Domestic competitors, particularly Huawei, have gained ground in the Chinese market, adding pressure on Apple's sales figures. The poor performance in China comes amid a turbulent week for US tech stocks, exacerbating investor anxiety.
Adding to Apple's challenges, its recently launched AI feature, Apple Intelligence, has faced scrutiny for inaccuracies and hallucinations. As the company's first product utilizing generative AI, Apple Intelligence was highly anticipated. However, it has been plagued with glitches and issues, particularly in inaccurately summarizing facts in push notifications. The situation led to the suspension of the news summary feature earlier this month. In response to these issues, Apple introduced a new update where all AI-generated notifications are displayed in italics to denote their origin.
Apple's stock took a further hit after DeepSeek's app climbed to the top spot in Apple's App Store, a development that wiped over $1 trillion from the leading US tech index. This setback highlights the competitive environment and investor concerns over Apple's ability to maintain its market position.
Despite these challenges, other major tech companies such as Microsoft and Meta have surpassed Wall Street's expectations with their earnings reports, showcasing resilience amidst the broader industry downturn. These reports contrast with Apple's performance and underscore the varying dynamics within the tech sector.