Apple’s efforts to revive its iPhone sales through artificial intelligence (AI) enhancements did not yield the expected boost during the holiday quarter, as global sales slipped by 1 per cent to $69.1 billion (£55 billion).

Despite the tech giant’s introduction of new AI-driven features, investor expectations of a surge in demand have not materialised, with other market pressures also weighing on performance.

Chief executive Tim Cook acknowledged that AI features had driven stronger sales in select markets, particularly the US, but noted that overall demand remained subdued.

He, however, remained confident about Apple’s future product offerings, saying, “I could not feel more optimistic about our product pipeline. So I think there’s a lot of a lot of innovation left on the smartphone.”

Apple has been rolling out AI-powered features in phases, with plans to expand them to more languages in April.

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However, the initiative has not been without setbacks, with its AI-generated news summaries coming under fire for inaccuracies.

The errors, which affected multiple news sources, including the BBC, led to widespread criticism and ultimately forced Apple to suspend the feature.

Beyond AI adoption, Apple is facing increasing competition in China, where its iPhone shipments fell by nearly 10 per cent in the latest quarter.

Meanwhile, domestic smartphone brands such as Huawei and Xiaomi saw significant gains, with year-on-year increases of more than 20 per cent, according to research firm International Data Corp.

Analyst Logan Purk of Edward Jones observed that while China poses a potential risk, Apple’s brand positioning could help maintain demand.

“While China is a potential risk, we think the appeal of Apple products as a luxury product and the potential of AI innovations will keep demand steady in the country,” he said.

Another looming challenge for Apple is the potential imposition of tariffs on Chinese-manufactured products in the US.

President Donald Trump has proposed tariffs of up to 60 per cent, a move that could significantly impact Apple’s production costs and pricing.

Cook assured investors that the company was closely monitoring the situation, though the details of the proposed tariffs remain uncertain.

Despite weaker iPhone sales, Apple reported a 4 per cent rise in overall revenue to $124.3 billion, buoyed by strong performance in its services division—including Apple TV, Apple News and Apple Pay—as well as a notable increase in computer sales.

Profits also grew by 7 per cent year-on-year to $36.3 billion.

Market analysts believe Apple must accelerate its AI roll-out and explore new product categories to maintain its competitive edge.

Jacob Bourne, an analyst at Emarketer, noted that Apple’s execution remains strong but faces increasing scrutiny.

“The results show Apple can still execute, but the next few quarters will test whether it can balance its cautious approach with the market’s hunger for AI innovation,” he said.

Apple’s stock, which surged 30 per cent last year on optimism about AI-driven demand, has since dropped by 5 per cent in the first month of 2025.

While the latest figures suggest Apple’s AI-infused iPhone has yet to fuel a major sales boom, the company remains optimistic about its long-term prospects, particularly as more consumers upgrade their devices.