Apple exceeded expectations in its holiday quarter, reporting significantly higher global iPhone sales and strong growth in its China market, while also boosting profit margins and revealing over 2. 5 billion active Apple devices worldwide. This demonstrated CEO Tim Cook’s expert management of the $3. 8 trillion company but also highlighted challenges and limits to Apple’s leadership in a rapidly evolving market. The company continues to excel at manufacturing and selling hardware, particularly under supply chain pressures, yet offered little insight into its AI vision. Despite the impressive quarter, Apple’s stock barely moved, gaining only 0. 2% in after-hours trading. Financially, Apple’s first fiscal quarter was outstanding, with revenue reaching $143. 8 billion—a 16% increase year-over-year and surpassing analyst expectations of $138. 5 billion. Net income also rose 16% to $42. 1 billion, or $2. 84 per share, beating the $2. 67 expected. iPhone sales led the growth, up 23% year-on-year, driven by the new iPhone 17, while Apple’s Greater China business soared 38% to $25. 5 billion. Retail traffic and iPhone sales in China hit record highs. The iPhone 17 launch reinvigorated a previously slowing segment, which had averaged only 4. 2% growth over six quarters. Demand is so strong that Apple faces constraints on sourcing advanced 3-nanometer chips powering the devices. Cook, known for his supply chain mastery from his prior role as Apple’s COO, showcased this strength by projecting 13% to 16% sales growth for the next quarter and robust gross profit margins between 48% and 49%.

An analyst expressed surprise at such high margins amid soaring memory chip prices and supply shortages fueled by AI data center demand. On AI, however, Apple remained elusive. Amid market uncertainties like tariffs, Apple portrays itself as stable, but its AI strategy lacks clarity. When questioned about its Google partnership for AI in Siri, timelines, and updates, Apple executives responded vaguely. Cook spoke generally about integrating intelligence personally and privately into products, while CFO Kevan Parekh gave no specifics on the portion of devices capable of running advanced AI Siri, only stating that capability is “growing. ” Many firms keep AI plans confidential, but Apple’s history includes notable AI delays and failures. Despite promising advanced AI features years ago, it has delivered little. The Google Gemini partnership for Siri is viewed as acknowledging struggles with in-house AI model development. In summary, Apple’s iPhone segment is thriving once more, yet its longer-term innovation, particularly in AI, remains uncertain as the company faces an evolving tech landscape. (This article originally appeared on Fortune. com. )