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Apple and Amazon reported their September quarter results with mixed results, highlighting the intensifying race for artificial intelligence (AI) and the challenges in China. Apple shares fell 2% after hours on continued weak sales in China and disappointing forecasts. Amazon shares rose more than 5% amid continued growth in its AI-powered AWS cloud and a positive outlook for the holiday season.

Apple reports weak sales in China but strong quarterly performance

Apple’s revenue in Greater China, Apple’s third-largest market behind the United States and Europe, fell 0.3 percent from a year earlier, extending its decline to one year. Despite performing better compared to a 6.5% decline last year, expectations were high with investors hoping for a significant rebound amid sales driven by Apple Intelligence.

Apple released its latest device, the iPhone 16, more than a month before earnings were released and only launched iOS 18.1, which enables AI features, earlier this week. The delay may have impacted iPhone sales, alongside fierce competition from Chinese smartphone makers.

Separately, Apple exceeded analysts’ expectations in terms of overall performance, with revenue reaching a record level for the September quarter at $94.93 billion (87.22 billion euros), up by 6.1% compared to last year, exceeding the estimated annual growth of 5.7%. iPhone sales reached $46.22 billion (42.47 billion euros), an increase of 6% compared to the same quarter last year, exceeding market expectations.

However, the bottom line was significantly impacted by a one-time charge related to “the impact of the annulment of the European Court’s state aid decision,” Apple said, leading to earnings per share of $0.97 (€0.89). Excluding charges, earnings per share would have shown growth of 12% to $1.64 (€1.51). The world’s largest company expects growth in the low to mid-single digits for the December quarter, lower than the forecast annual increase of 7%.

Another key indicator, service turnover, remained the most profitable segment with constant growth dynamics, with a turnover of 24.97 billion dollars (22.94 billion euros), an increase of 12% over last year, a slight slowdown from 14% in the previous quarter. CFO Luca Maestri expects service revenue to continue double-digit growth in the current quarter. iPad sales rose 8% year-over-year, also slowing from the 24% increase seen in the June quarter.

Compared to other tech giants, Apple appears to be lagging behind in the AI ​​race, with no promising progress in monetizing its Apple Intelligence applications. At the same time, it could face ongoing challenges from European regulations, as third-party payment requirements could reduce its profitability.