Investors Aren’t Buying Apple’s New iPhone

Apple’s stock has recently been underperforming its big tech peers. PHOTO: BRITTANY PETERSON/ASSOCIATED PRESS
Apple’s stock has recently been underperforming its big tech peers. PHOTO: BRITTANY PETERSON/ASSOCIATED PRESS


A subdued outlook indicates that investors’ fears over the iPhone cycle and China aren’t misplaced.

Compared with its big tech peers inflated by artificial-intelligence hype, Apple seemed to have the lowest bar to clear in the current earnings season. The world’s most valuable company still didn’t quite make it.

At the very least, Apple’s fiscal fourth-quarter results late Thursday indicate that its newest iPhones aren’t off to a raging start. The company launched the iPhone 15 family during its usual window about a week before the quarter’s end in late September. iPhone revenue for the quarter rose 3% year over year to about $43.8 billion, in line with analysts’ forecasts. But that compares with a 10% gain in the previous year’s fourth quarter and a 47% surge in 2021, when the iPhone 13 family launched to surprisingly strong demand.

Expectations also don’t seem terribly strong for the current quarter ending in December. Apple said on its conference call Thursday that it expects overall revenue to be flat compared with the same period last year, which would be below the 5% gain Wall Street was expecting. And Chief Financial Officer Luca Maestri would only say he expects iPhone revenue to grow for the period. Analysts were projecting 6% growth for the quarter, according to FactSet.

Apple’s shares slipped more than 3% in after-hours trading following the call. That is a notable decline considering the stock already had been underperforming its big tech peers lately. Concerns were mounting over the new iPhone cycle and longer-term issues like the health of the China market and the company’s lucrative relationship with Google, which pays Apple billions of dollars every year to be the default search engine on the iPhone and other devices. That relationship is at the center of an antitrust trial against Google that has now lasted two months. Apple Chief Executive Tim Cook said “we make decisions that are in the best interest of our users" when asked about the matter on Thursday’s call.

(Graphic: WSJ)
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(Graphic: WSJ)

The case is a long way from resolution. China, however, is a more pressing issue. Apple’s revenue for its Greater China segment fell nearly 3% year over year compared with a 6% rise in last year’s fiscal fourth quarter. That brought China’s contribution to Apple’s total revenue to its lowest point in nearly three years. Cook said Apple had record iPhone revenue in China in the most-recent quarter. Data from market research firm Counterpoint suggests the iPhone has lost momentum in China to a newly resurgent Huawei, though.

Cook said on the call that he views China as an “incredibly important market, and I’m very optimistic about it." But he was notably more enthusiastic about India, an emerging market and manufacturing hub for the company that he mentioned three times in his opening remarks compared with no mention of China.

The size of Apple’s actual business in India is unknown as the company folds financial results in the country into its giant Europe segment that also includes the Middle East and Africa. China, meanwhile, accounts for the bulk of Apple’s manufacturing and about 19% of the company’s revenue in the just-ended fiscal year. And Apple’s fate there has become intertwined with geopolitical pressures that are largely beyond the company’s control. That leaves Apple with few options beyond doing what it has long done best—selling premium devices enhanced with a growing line of services.

For a company that now moves nearly $300 billion a year of those devices, selling even a few more every year can be tricky.

Write to Dan Gallagher at

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