Apple has some explaining to do this week
Apple
- Apple is set to report third-quarter earnings on Thursday after the US market closes.
- It's the first results since it announced its AI plans, including Apple Intelligence, in June.
- Analysts expect details on China, AI, and more will be key on Thursday.
Apple will report third-quarter earnings on Thursday afternoon, the first official look at the company's performance since it announced its long-awaited artificial intelligence plans in June.
The company's last results report was in May, and it all but avoided questions about AI. But since then, Apple has held its annual Worldwide Developers Conference, where it debuted Apple Intelligence and announced a partnership with ChatGPT.
Now that the news is out, investors will be seeking further updates during the upcoming Q3 call — and execs may be a lot less tight-lipped this time round.
But AI isn't the only thing people will be listening out for.
The Vision Pro headset, the iPhone's shaky performance in China, and its "services" growth were talking points in its last earnings call with investors — plus its ongoing battles with government entities in the US and Europe. No doubt there will be questions on all those things, plus the rollout of its new lineup of iPads.
Here's what we expect will be the highlights of Thursday afternoon's call.
Expect questions about the Apple Intelligence delay
Apple
Bloomberg reported Sunday that Apple Intelligence won't begin rolling out in September, as Apple first announced. It was expected to come out alongside the new iPhone and iOS 18, but will reportedly now be available in October.
Although analysts said the delay is no big deal and shouldn't negatively impact iPhone 16 sales, investors might question which features will lead the rollout.
Deepwater Asset Management analyst Gene Munster told Business Insider that the "most important point" related to Apple Intelligence will be how many features will be in that initial release — and if Apple has developed new ones in the months since WWDC.
"WWDC was almost two months ago, and in the world of AI, two months is like two years," Munster said.
CEO Tim Cook will probably talk about China
AFP/Getty Images
China was a hot topic during Apple's last earnings call, and it should be no different this time.
"We're anticipating continued headwinds to iPhone sales from Chinese competition and slowing replacement cycles globally," William Kerwin, an analyst at Morningstar, told BI.
CEO Tim Cook acknowledged in May that work needed to be done in China to help iPhones gain popularity over rivals like smartphone maker Huawei.
"I think it has been, and is, the most competitive market in the world," Cook said during the Q2 call.
The Wall Street Journal reported last Friday that Apple fell out of the top five smartphone shippers in China during the quarter as competitors like Vivo, Xiaomi, and Huawei experienced higher demand from local consumers.
Cook said he was "very optimistic" about China in May; investors will want to hear more on Thursday.
Updates on how devices launched this year are doing
Apple
When Apple released its new iPad Air and iPad Pro models in May, analysts questioned how many Apple device owners, if any, would upgrade to the latest tablets.
Unlike the iPhone, which Wedbush Securities' Dan Ives said is on track for a "golden upgrade cycle," iPad owners aren't usually rushing to get the latest model.
And in February, the company debuted its first piece of new hardware in years with the $3,500 Vision Pro headset. While Cook told investors that it's "off to a good start," reviews have been mixed.
More talk about its growth in 'services'
Dave Johnson/Business Insider
For Apple, services include subscriptions like Apple Music and Apple TV+, but in-app purchases and a multi-billion dollar deal that keeps Google as the default search engine on Safari are the main source of growth in the category.
Apple talked about how well its services were doing in Q2, and Kerwin said analysts will be looking for continued "double-digit growth for the services business."
Are you a current or recent Apple employee? Reach out to this reporter via email at jhart@businessinsider.com or Signal at @jordyhart.99.