Apple’s Record Margins Mask iPhone Sales Stumble in Q1 2025
Apple’s record-breaking profit margins told a tale of metamorphosis in Q1. Following a botched Vision Pro rollout, a terrible start to the year, and a 2.66% iPhone revenue shortfall, the tech goliath beat earnings expectations by 2.26% — revealing a shifting focus in Apple’s business model.
- iPhone sales struggled, particularly in Greater China, where revenue plunged by 11.1% — though markets that support Apple Intelligence — like the US, Canada, and UK — posted stronger performance.
- The company’s transformation continued as Services revenue hit $26.34B, while Mac and iPad sales surged 15% from last year — pushing gross margins to a record 46.9%.
The services silver lining: With a staggering 74% gross margin, Apple’s services unit — which includes AppleCare, iCloud, and the App Store — has evolved into a $100B powerhouse. This comes just as Apple Intelligence’s April language expansion, including simplified Chinese, aims to reignite growth in key markets. As the company continues its transformation from hardware giant to services juggernaut, Wall Street’s love affair with Apple’s profit engine shows no signs of cooling.
