Apple CEO Tim Cook
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While Apple had a good fourth quarter, analysts are only concerned about the huge holiday quarter revenue, a period that will be heavily impacted by the rollout of Apple Intelligence.
On Halloween night, Apple gave investors a treat in the form of its financial results. The fourth quarter of 2024 numbers sound very good for the company.
For starters, the $94.93 billion in revenue it reported for the period was up 6.1% year over year. In fact, that’s up from the $91.8 billion Apple reported in its first-quarter 2020 results.
Apple’s revenue and net income as of Q4 2024
That’s impressive because the first quarter of the year is always Apple’s best-selling period. Holiday shopping habits, as well as fall product launches, make the first quarter a very profitable period.
Similarly, gross profit of $39.7 billion was up 8.5% year over year, as was operating profit of $29.6 billion, up 9.7%.
Net income of $14.7 billion is a big 35.8% decline from Q4 2023. However, net income often fluctuates between growth and decline over time anyway.
The key is that it is still net income and not a loss.
Product Profit
Apple’s core product, the iPhone, saw sales growth during the quarter. Reaching $43.8 billion, it was up 5.5% year over year, which is a good start for the iPhone 16 generation.
Apple’s Revenue and Net Income as of Q4 2024
The key here is that the iPhone 16 lineup didn’t really have much of an impact on the quarter at all. It was introduced so late that it could have had two weeks to get things moving.
This was also true for other products Apple introduced at its fall events, like the AirPods Max with USB-C and the Apple Watch Series 10. Sure, Apple enjoyed the sales, but not enough to be excited about them at the time.
However, it will see more significant changes compared to the products released in Q3. In fact, it was love for iPad: the iPad Pro M4, iPad Air M2, and Apple Pencil Pro all got a full quarter of sales.
Apple's device revenue as of Q4 2024
As a result, iPad sales reached $6.95 billion, up 7.9% year-over-year. Services, Apple’s ever-growing segment, grew 11.9% year over year to $24.7 billion.
Despite the lack of Mac launches in Q3 and Q4, there was still a very small 1.7% increase to $7.74 billion.
Q1 2025 with a Touch of Apple Intelligence
While Apple’s fourth-quarter product launches are important, they won’t matter much until Q1 2025. That’s the three-month period when Apple makes the most bang for its buck, and it times its product launches around that time.
Not only will Apple benefit from the usual sales patterns at this time of year for the iPhone 16, but it should also see more sales from the gradual rollout of Apple Intelligence over this period and beyond.
Apple Intelligence will also help in two other product categories that launched in October, at the start of the quarter. Updating the iPad mini to use Apple Intelligence adds another tablet to the lineup that uses generative AI features, and at a more consumer-friendly price point than the iPad Pro.
iPad revenue for Q4 2024
Then come the Mac launches from Apple’s October announcement week. Updates to the 24-inch iMac and MacBook Pro lines with M4 chips, as well as a refreshed Mac mini, also offer more upgrade paths backed by the promise of Apple Intelligence.
As usual, Apple declined to provide actual guidance for its first quarter of 2025 results. Comments suggest that growth could be low for the period, in the single digits year over year.
Despite this, the company will be looking to beat its previous highs. For the first quarter of 2023, the company reported revenue of $119.58 billion, compared to the record high of Q1 2022, which reported revenue of $123.95 billion.
Analyst Opinion
Before Apple's results were released, analysts provided predictions of what to expect from the results. After the results are released, those same analysts give their reactions to the results, often justifying or embellishing their predictions compared to reality.
Morgan Stanley
Morgan Stanley has mixed feelings as results offer something for both bulls and bears, “leaving the debate little changed.” The first-quarter outlook is “mixed,” with lighter revenue than its purchase expectations but better gross margins than consensus.
Apple's Quarterly Services Revenue for Q4 2024
For iPhone, Q1 results could see zero revenue. Bulls will be dragging for a possible iPhone 17 supercycle, while bears will say the stock is expensive, the note to investors adds.
Morgan Stanley rates Apple as “Overweight” with a $273 price target.
Evercore ISI
In a note from Evercore, Apple delivered “modest growth” in its fourth-quarter results. Revenue growth of 6% was driven by solid iPhone and Services performance, offsetting subdued growth in other areas.
Apple's Wearables, Home, and Accessories Revenue as of Q4 2024
It points to Apple’s guidance for single-digit growth in Q1 2025 results and a more staggered iPhone cycle in line with Apple Intelligence’s rollout as factors to consider. This could lead to “more moderate” seasonality in Q2 and Q3 2025.
Evercore maintains an “Outperform” rating on Apple with a $250 price target.
Piper Sandler
Piper Sandler, in a note to investors on Friday, said Apple delivered results that slightly exceeded expectations, but the December quarter is expected to be below consensus.
This could lead to subdued iPhone growth, which is already apparently being seen with Apple reaching supply and demand parity with standard iPhone models. “Unless Apple Intelligence unexpectedly spurred stronger demand, we suspect iPhone growth could remain limited over the next few quarters,” the note said.
Apple's Wearables, Home, and Accessories Revenue Through Q4 2024
Elsewhere, the Mac met expectations, iPad came in below expectations, and Services slightly missed consensus expectations.
Piper Sandler reiterates that Apple is “neutral” with a $225 price target.
TD Cowen
In its note, TD Cowen said its December quarter guidance was “enough to reassure investors who may have feared the worst.” September quarter revenue met expectations, with iPhone and zero revenue from China “relatively positive given the challenging macro environment.”
Apple’s full-year revenue, gross margin, and net income
iPhones slightly beat consensus, and iPad still benefits from refreshed iPad Air and iPad Pro. Macs will benefit from recent launches and the potential for more generative AI features.
TD Cowen calls Apple a “buy” with a $250 price target.
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