Apple Poised for Record iPhone Sales as AI Strategy Shifts to Google’s Gemini
Apple is preparing to announce its strongest iPhone sales growth in four years on Thursday, fueled by high demand for its premium Pro models and a significant strategic pivot toward artificial intelligence powered by Google technology.
Investors will be closely scrutinizing Apple’s earnings call for details on how the company intends to navigate the ongoing global shortage of memory chips, a challenge expected to increase production costs and potentially impact profit margins.
The decision to integrate Alphabet’s Gemini into a revamped Siri and broader “Apple Intelligence” features marks the most substantial change yet in the tech giant’s approach to AI. This move allows Apple to leverage its vast ecosystem of over two billion devices without incurring the massive capital expenditures required to independently develop cutting-edge AI models.
Wall Street has largely reacted positively to the partnership. “This should demonstrate to the market that the iPhone will remain the go-to device for consumers who want access to new AI tools,” one analyst from Goldman Sachs noted. Despite the nascent stage of AI’s impact on smartphone demand, sales of the latest iPhone 17 series experienced a surge during the final three months of 2025 – traditionally Apple’s strongest quarter.
Apple has successfully attracted customers in China and emerging markets with enhancements to the Pro devices, including a redesigned camera system and increased storage options. The company solidified its position as the global smartphone market leader last year, capturing a 20% share, an increase from 18% in 2024, according to data from Counterpoint.
Analysts surveyed by LSEG predict iPhone sales will grow by 13.8% in Apple’s fiscal first quarter (October-December), representing the most significant growth in over four years. Overall revenue is projected to reach a record $138.43 billion, a 11.4% increase, driven in part by a 14.1% jump in Apple’s services business. Sales in Greater China are estimated to have risen approximately 15%, according to Visible Alpha data.
However, Apple’s stock performance lagged behind other tech giants last year, with a gain of just 8.5%, compared to Microsoft’s 14.7% and Alphabet’s substantial 65.3% increase – a disparity partly attributed to the AI-driven market rally.
Some investors believe Apple can capitalize on the AI revolution without the extensive infrastructure investments undertaken by its competitors. “Apple can probably generate a positive return with minimal investment in AI, thanks to its distribution,” explained Gerrit Smit, manager of the Stonehage Fleming Global Best Ideas Equity fund, which holds Apple shares.
While revenue continues to climb, Apple’s Services segment, encompassing the App Store, faces potential headwinds due to increased regulatory scrutiny in Europe regarding its payment practices. The company has already been subjected to substantial fines on the continent for allegedly abusing its dominant position in the mobile app market.
Looking ahead to the fiscal second quarter, the availability of memory chips remains a concern, potentially increasing iPhone manufacturing costs. Though, Apple has a proven track record of effectively managing supply chain disruptions.”We expect the strategy to include using its market scale to pressure suppliers
