Tech Giants Defy Industry Forecasts

Tech giants Apple and Amazon have defied industry forecasts with better-than-expected financial results. Apple’s success is largely due to its record-breaking iPhone sales, while Amazon’s success is thanks to its cloud computing arm Amazon Web Services (AWS).

Record-Breaking Sales

AWS revenue rose 20.2% to $33 billion, a pace not seen since 2022. AWS accounts for 60% of Amazon’s total operating revenue. Cloud growth has been a key focus for the company amid ever-increasing competitive pressure from Google and Microsoft, which also reported jumps in sales this week.

iPhone Sales

The introduction of punitive tariffs on India and China – the main production locations for the iPhone – has made Apple’s record sales all the more welcome. The tariffs cost Apple $1.1bn in the last quarter and are expected to cost another $1.4bn in the final three months of the year. However, the new iPhone 17 range is a hit, with consumers won over by a price that was no higher than last year’s model.

Financial Results

Consumers were won over by the price, particularly in the US and Europe, resulting in sales totaling $49bn in the July-September period – up 6% on the previous year. Global market analyst IDC says nearly 59 million iPhones were sold worldwide in the July-September quarter, putting Apple in second place behind Samsung with 61.4 million of its Android phones. Buoyed by the iPhone results, Apple earned $27.5 billion, or $1.85 per share, almost doubling its profit from the previous year. Sales rose 8% year-on-year to $102.5 billion.

Cautious Outlook

Wall Street analysts were cautious about both companies and their tech rivals, citing uncertainty over tariffs and overstating investments in AI. While Amazon welcomed its latest results, it gave a cautious revenue outlook for its fiscal fourth quarter, citing ongoing tariffs as a possible drag on sales performance. Companies, including Amazon, are adopting AI in almost every area of their operations in hopes of reducing costs and increasing productivity.

AI Boom

On Wednesday, Federal Reserve Chairman Jerome Powell said he doesn’t believe the AI boom is a speculative bubble like the dot-com era. Today’s AI leaders “actually have revenue,” he said. There have been tens of thousands of job losses at U.S. tech companies this year, as companies adopt AI to reduce costs and increase productivity.