Apple (AAPL.O), opens new tab is expected to report tepid quarterly revenue growth on Thursday as its slow roll-out of artificial intelligence features and tough Chinese competition weighed on iPhone demand during the crucial holiday-shopping season.

The company and its rivals Google and Samsung have been leaning on AI to drive sales of their devices. But Apple's latest iPhone 16 series lacked such features at launch in September and some of its AI services, including an improved Siri, are only expected later this year in some regions.
 
Apple's challenges with AI were highlighted this month when it had to pull a news-summarizing AI tool due to inaccurate headlines, which drew criticism from the BBC and other news outlets.

"AI is the new technology innovation, the fact that Apple's handsets are lagging behind on capabilities is a key reason why their competitive positioning has weakened and the company has lost market share," said Jane Hepburne Scott, investment manager at Aegon Asset Management, which owns Apple shares.

Under pressure from a resurgent Huawei as well as other Chinese smartphone makers, Apple saw its share of the global smartphone market narrow to 23% in the final three months of 2024 from almost 25% a year earlier, according to IDC data.

The decline was steeper in China - its third-largest market - where Apple's share fell by 10 percentage points to 17%, the data showed.

Although the Chinese government has been offering subsidies to smartphone purchasers to boost domestic consumption, these subsidies target low- to mid-tier phones priced below $800, excluding high-end iPhones, Barclays analysts said in a note. Source: reuters

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