Apple reported better-than-expected profits and sales as demand for iPhones remained challenged by inflation and the economic downturn.
Apple reported quarterly sales and profits of $83 billion and $1.20 a share, beating Wall Street expectations. The report is a positive sign for the company, which lost its status as the world’s most valuable company earlier this year to oil giant Saudi Aramco. The company’s shares rose 3.2% after hours in response to the news.
There is no slowdown in iPhone demand, Apple CFO Luca Matri told Reuters. Apple reported iPhone sales of $40.7 billion, a 3% increase from a year ago and ahead of the overall global smartphone market. But the slowing economy is hurting sales of advertising, accessories and home products, Maestri said.
“Fortunately, we have a very broad portfolio, so we know we can explore that,” he said.
A shortage of accessories will continue to limit Mac and iPad sales, Maestri said, although the impact has been waning.
In April, Apple warned that it expects growth to slow despite a stronger-than-expected quarterly result. The company has struggled due to Covid-19 shutdowns at factories in China and computer chip shortages.
Apple has managed to maintain more stability than other tech giants that have announced slowdowns and layoffs. But the company plans to cut hiring and spending next year to be more cautious as the expected recession eases, Bloomberg reported this month.
“Apple’s move reflects a broader slowdown in investing in new things, new companies and new products,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Reuters.
Google, Microsoft and Meta have announced plans to hire or cut jobs. Tesla’s Elon Musk said the company would cut 10 percent of its workforce, while Netflix, which lost 1 million subscribers earlier this year, said it was laying off 300 workers.
After seeing record profits during the pandemic, the industry as a whole has been struggling for months with interest rates, inflation and slower economic growth. The tech-led Nasdaq Composite Index is down 26 percent this year.
Google’s parent company, Alphabet, reported higher revenue than last year, suggesting the company may be weathering a slower-than-expected economy. Meanwhile, Meta reported that it expects to see the first decline in earnings after the company goes public.
Reuters contributed to this report.
