Apple Reports Strong iPhone 17 Demand Despite AI Development Delays

Apple is poised to report impressive quarterly results on Thursday, demonstrating its ability to drive a robust iPhone upgrade cycle despite lagging behind in the artificial intelligence race, a factor that has tempered Wall Street's enthusiasm for the tech giant.

The new iPhone 17 series, launched on September 19, has generated strong initial demand in key markets including the United States and China. Consumers have been drawn to its enhanced display quality, expanded storage options, and upgraded processor capabilities.

Although the July-September period included only a brief window of new iPhone sales, the positive reception signals promising prospects for the upcoming holiday quarter, traditionally Apple's most profitable period when many users choose to upgrade their devices.

These encouraging sales figures have helped alleviate concerns about Apple potentially falling behind competitors like Samsung Electronics, which has been more aggressive in incorporating AI features into its product lineup.

Apple shares experienced their strongest quarterly growth in over two years during July-September, rising 24 percent. The company recently achieved a $4 trillion market valuation milestone, becoming only the third company to reach this landmark. However, its stock still lags behind other "Magnificent Seven" tech companies this year due to its perceived slowness in AI development.

"Apple is riding high into earnings with better-than-expected iPhone 17 sales in both the US and China, buoying it back to top-smartphone-provider status," observed eMarketer analyst Jacob Bourne. "Yet the battle is far from won as questions about its AI standing linger."

According to research firm Counterpoint, iPhone 17 sales in the first ten days exceeded those of the previous generation by 14 percent in the US and China markets, with consumers showing particular interest in the higher-margin iPhone Pro models.

The new lineup has also boosted Apple's September-quarter shipments in China, where the company faces strong competition from local manufacturers Xiaomi and Huawei, as revealed in a separate IDC report.

However, demand for the slender iPhone 17 Air has been relatively subdued, likely due to its $1,000 price point and single-lens camera configuration. Additionally, pre-orders in China only began in mid-October, considerably later than in the US, as carriers awaited regulatory approval to support the eSIM-only device.

Wall Street analysts project iPhone sales growth of 8.6 percent to $50 billion, setting a record for the July-September period, which represents Apple's fiscal fourth quarter, according to data compiled by LSEG.

Total revenue is expected to increase by 7.6 percent to $102.17 billion, with earnings projected at $1.77 per share.

The company, which has been shifting more US-destined iPhone production to India to mitigate tariff impacts, indicated in July that it anticipates approximately $1.1 billion in tariff-related costs for the period.

Some analysts suggest investors will be seeking clarity regarding Apple's AI strategy, particularly following reports of high-profile departures from the company. Apple has reportedly delayed the launch of its AI-enhanced Siri assistant until 2026.

"They're clearly challenged. They have not come up with any compelling offerings and they don't seem to have a strategy that's compelling enough to keep a lot of very high-end AI talent working there," commented Bob O'Donnell, president at TECHnalysis Research.