Apple and Microsoft wrap up a profitable Q4 2024 with both tech giants surpassing Wall Street expectations on the back of strong performances in cloud services and AI investments. While Apple drives record iPhone sales and sees steady service revenue, Microsoft leverages its AI-powered Azure and gaming divisions for major revenue boosts. The latest earnings reflect each company’s strategic pivots and growing dominance in key technology sectors.
What’s Happening & Why This Matters
Microsoft’s Revenue Driven by Cloud and Gaming
Microsoft’s Q4 earnings report shows a 16% increase in revenue, reaching $65.6 billion. Profits rise by 11%, despite the company’s ambitious $20 billion AI investment this quarter, almost double what it spent last year. A significant part of Microsoft’s growth comes from Azure and its cloud services, which experience a 33% increase, with 12% attributed to AI services. This AI focus addresses both internal productivity needs and external customer demands, underscoring Microsoft’s commitment to becoming an AI leader in the enterprise sector.
Microsoft’s gaming division also sees a 61% jump in content and services revenue, boosted by the recent $69 billion Activision acquisition. The success in gaming reflects Microsoft’s strategy of extending game access beyond its own hardware, such as releasing exclusive games on Sony’s PlayStation 5, capturing a larger gaming market .
Apple Sees Record iPhone Sales and Service Revenue
Apple reports $94.93 billion in Q4 revenue, surpassing analysts’ expectations of $94.4 billion. This growth, a 6% increase year-over-year, is driven primarily by record iPhone sales totaling $46.22 billion, up 5.5% from last year. Apple’s services division also performs well, jumping 11.9% to reach $24.7 billion. Other product lines, including iPads and Macs, show modest growth, while wearables experience a slight decline.
Although product launches like the iPhone 16, AirPods Max with USB-C, and the Apple Watch Series 10 arrive late in the quarter, they set the stage for a robust Q1 2025. Tim Cook emphasizes Apple’s strong cash flow, allowing the company to return $29 billion to shareholders this quarter, further showcasing Apple’s robust financial health .
Apple CFO Leadership Change
This quarter’s report also marks a leadership transition for Apple, as CFO Luca Maestri prepares to step down in January. Maestri, alongside CEO Tim Cook, highlights Apple’s record-high installed base across all devices and regions, citing high customer satisfaction and loyalty as key drivers of Apple’s sustained success.
TF Summary: What’s Next
Apple and Microsoft’s strong Q4 earnings shows the success of their strategies in AI, cloud services, and consumer technology. As both companies pursue even more ambitious innovations, Apple is poised for strong growth with new products, while Microsoft’s AI and cloud focus promises to keep it competitive in the enterprise market. Both giants are set to expand their influence across tech sectors in 2025 to position themselves at the forefront of next-gen technologies.
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