Apple Inc. projected revenue for the holiday quarter that beat analysts’ estimates, signaling solid demand for the latest iPhones, new services like Apple TV+ and wearables such as upgraded AirPods and Apple Watch.
Fiscal first-quarter sales will be $85.5 billion to $89.5 billion, the Cupertino, California-based technology giant said Wednesday in a statement. Analysts were looking for $86.5 billion, according to data compiled by Bloomberg.
The forecast suggests Apple is seeing strong demand for the iPhone 11 and iPhone 11 Pro models that went on sale in September. The company’s shares had surged in recent weeks on optimism about the upgraded devices. Chief Executive Officer Tim Cook told a German newspaper at the end of September that the new models had a “very strong start.”
On Wednesday, Cook said “we’re very optimistic about what the holiday quarter has in store.”
Apple shares rose about 1.5% in extended trading on Wednesday. The stock closed at $243.26 in New York earlier on Wednesday, leaving it up more than 50% this year.
The new forecast means Apple will return to growth, after missing sales targets in last year’s holiday period. Fiscal fourth-quarter revenue and profit also topped Wall Street estimates.
“This was a strong quarter and this should silence some of the concerns out there regarding the iPhone,” said Shannon Cross of Cross Research. “The guidance was also strong.”
While Apple has developed different devices and new digital services in recent years, it still relies on the iPhone for more than half of its revenue and profit. The handsets are also the hub for the company’s other offerings, so investors remain transfixed by the fortunes of the iconic device.
Analysts had become increasingly bullish on iPhone 11 sales. Apple cut some prices and has offered more attractive trade-in deals. And there are hundreds of millions of aging iPhones that will need to be upgraded soon. Still, a trade war between the U.S. and China has sparked concern that Chinese consumers may favor domestic smartphones over Apple’s product. And lower iPhone prices have some analysts worried that revenue growth will be harder to come by.
The latest iPhones and Apple Watch went on sale on Sept. 20 and the quarter ended on Sept. 30, so Apple’s fiscal fourth-quarter results included some early sales of these devices.
Apple reported fourth-quarter sales of $64 billion, up 1.8% from a year earlier. Net income was $13.7 billion, or $3.03 a share, versus $14.1 billion, or $2.91 a share, in the same period last year. Analysts were looking for revenue of $63 billion and profit of $2.84 a share.
The company said it sold $33.4 billion worth of iPhones in the quarter, beating analysts’ estimates of $32.3 billion, but still down from $36.8 billion in the year-ago quarter.
The Wearables, Home, and Accessories segment, which includes the Apple Watch, AirPods, HomePod, Apple TV, and Beats headphones, generated $6.5 billion in revenue, an increase of 54%, easily topping Wall Street estimates.