Apple Sees Strong U.S. Consumer Spend as iPhone Demand Drives Record September Quarter

Apple is confident that the U.S. consumer will remain strong through the critical holiday season. In its Q4 earnings report, Apple said iPhone demand drove a record September quarter, with $49 billion in iPhone revenue, up 6% year over year.

With holiday shopping just around the corner, CFO Kevan Parekh guided a 10-12% year-over-year revenue growth in its December quarter, calling it Apple’s “best quarter ever.” He also predicted double-digit growth for iPhone sales, signaling continued strength in consumer spending.

Tim Cook, Apple’s CEO, noted that the iPhone’s performance is part of a larger trend of consumers upgrading their devices despite the macroeconomic uncertainties. Apple’s September quarter record for upgraders shows consumers are trading up to newer iPhone models, defying worries about a slowdown in spending.

“The iPhone lineup is resonating around the world,” said Cook, highlighting the success of the iPhone 17 series and noting that Apple’s core consumer base continues to demonstrate strong purchasing power.

Key Figures from Apple’s Q4 Earnings Report

Metric	Q4 2025	Year-over-Year Change
Total Revenue	$102.5 billion	+8%
Adjusted Diluted EPS	$1.85	+7%
iPhone Revenue	$49 billion	+6%
Mac Revenue	$8.7 billion	+13%
iPad Revenue	$7 billion	Flat
Wearables/Home/Accessories	$9 billion	Flat
Services Revenue	$28.8 billion	+15%
Gross Margin	47-48%	Stable despite higher costs
Capital Expenditures (CapEx)	Focus on AI infrastructure	Increased for private cloud compute

Apple’s AI Focus and Investments

A key topic in Apple’s earnings call was its artificial intelligence (AI) investments. Apple is focused on making Siri more personalized, with plans to release an upgraded version next year. Cook said the company is making good progress on Apple Intelligence, a set of on-device and private cloud features aimed at delivering more personalized, capable, and effortless experiences.

Apple has already started using its own Private Cloud Compute infrastructure for Siri queries and is ramping up server production in Houston. The company is also significantly increasing investments in AI, according to CFO Parekh, and is open to pursuing mergers and acquisitions (M&A) to further accelerate its AI development.

Apple’s AI efforts underscore its push to deepen its tech infrastructure, particularly with its own private cloud and AI-driven technologies, aligning with broader industry trends where large tech firms are heavily investing in AI to power future innovations.

Services Continue to Drive Revenue Growth

Apple’s Services business remains a standout performer. The segment reached an all-time high of $28.8 billion in revenue, up 15% year over year. Apple’s payment services, including Apple Pay, also set new records. The number of active Apple Pay users grew double digits year over year, highlighting strong demand for its digital wallet services.

Another area of growth was advertising — Apple achieved a record in its first- and third-party advertising business, further solidifying its growing role in the digital advertising space.

In total, Apple’s fiscal-year services revenue surpassed $100 billion, driven by an expanding installed user base and rising engagement with its suite of services, including iCloud, Apple Music, Apple TV+, and the App Store.

Regional Performance: U.S. Consumers Resilient, China Struggles

Apple’s Greater China region saw a 4% decline in revenue year over year, largely due to iPhone supply constraints and macroeconomic challenges in the region. However, Tim Cook remains optimistic, saying that the iPhone 17 lineup has been well received, and Apple expects to return to growth in the region in the upcoming quarter.

In contrast, U.S. consumer spending appears robust, especially on Apple products, with iPhone demand particularly strong heading into the holiday season. Despite global uncertainties, Apple’s ability to continue attracting upgraders in the U.S. reflects resilient consumer confidence and strong brand loyalty.

Outlook for the Holiday Season

Heading into the December quarter, Apple is forecasting continued strong demand for its products. Despite higher initial product costs and expected tariff impacts ($1.4 billion in tariff costs for Q1), Apple’s favorable product mix should help it maintain margins. Apple has also guided operating expenses to $18.1 billion to $18.5 billion, reflecting higher investments in R&D, particularly in AI.

With an impressive services performance, continued iPhone growth, and increasing AI investments, Apple is positioned for a strong holiday season. The company’s ability to integrate new technologies into its ecosystem, such as AI-driven features for Siri and seamless payments with Apple Pay, sets the stage for sustained growth and consumer engagement.

Why It Matters: A Resilient U.S. Consumer Drives Apple’s Growth

Apple’s Q4 earnings paint a picture of a resilient U.S. consumer, with spending holding strong despite broader macroeconomic concerns. The iPhone’s continued popularity, along with growth in services and AI investments, showcases Apple’s ability to adapt and thrive in changing market conditions.

This resilience positions Apple well for a successful holiday season, as the company continues to evolve its product offerings and expand its technological infrastructure. With a clear focus on AI innovation and consumer experience, Apple remains a dominant force in the tech and retail sectors.

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