Q : Can you discuss the challenges Apple faces in China, particularly regarding iPhone sales? A : Greater China revenue was down 11% year-over-year, with over half of the decline due to changes in channel inventory. Apple Intelligence has not been rolled out in China, which affects performance. The market remains highly competitive, and recent fiscal stimulus could impact future results.

Q : How does Apple view the potential for innovation in iPhone form factors in the future? A : We believe there is significant room for innovation in smartphones, and we are optimistic about our product pipeline. We expect continued advancements in form factors and features.

Q : What is driving the strong upgrade cycle for iPhones, and has Apple Intelligence played a role? A : We set an all-time record for iPhone upgraders, with compelling reasons to upgrade. The iPhone 16 outperformed the 15 from launch to the end of the December quarter, and Apple Intelligence contributed to stronger performance in markets where it was available.

Q : Can you comment on the sustainability of growth in emerging markets and their potential to offset China headwinds? A : We see robust growth in emerging markets, particularly in India, which set a December quarter record. The iPhone was the top-selling model in India, and we are expanding our retail presence there. Emerging markets offer significant upside potential.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

This article first appeared on GuruFocus .