Apple sales soared to $90bn (£65bn) in the first three months of 2021, smashing previous records as locked-down consumers bought more iPhones and laptops and demand in China surged.
Revenue was up 54% for the first three months of the year compared with the same period in 2020, as the Californian tech giant sold more products in every category.
Apple’s bumper results – sales were 15% higher than analysts expected – led a strong quarter for US tech’s behemoths, which have cemented their dominant positions in the world economy during the pandemic as spending has migrated to digital products and online shopping.
Facebook, the social network, on Wednesday revealed that its revenues for the first quarter of 2021 grew by 48% to $26bn, far exceeding analyst forecasts, and net income nearly doubled to $9.5bn.
Alphabet posted record results on Tuesday, with its main Google subsidiary enjoying a boom in advertising demand as companies tried to reach consumers locked at home.
For Apple, profits of $23.6bn were double those of the equivalent quarter in 2020, when the pandemic’s effects on the global economy first became clear. Its sales in China doubled year-on-year. Mac computer sales were a third higher than predicted and iPhone sales came in around $48bn – roughly $6.5bn higher than initial estimates.
After more than a month of delays, Apple unveiled its iPhone 12 line last autumn, which outperformed its predecessors and analyst expectations. With the 5G-equipped devices, the new iPhone helped Apple finish 2020 with its most profitable quarter ever, drove a 21% increase in revenue in the first quarter of 2021 and carried those successes into the second quarter.
Booming sales have led to soaring valuations for the tech companies. Apple’s valuation has more than doubled from the low it hit during the pandemic-triggered panic just over a year ago to $2.2tn, and its share price gained another 2.4% in after-hours trading following its results statement on Wednesday night.
Tim Cook, Apple’s chief executive, said the results showed the “enduring” demand for its products and highlighted “optimism consumers seem to feel about better days ahead for all of us”.
Apple also announced a $90bn share buyback and assuaged investors’ anxieties over how it would handle a severe semiconductor shortage that has hampered other companies and the automobile industry.
“There wasn’t a material issue with our results due to supply,” Cook told Reuters.
David Vogt, an analyst at UBS, an investment bank, said the “strong across-the-board” results showed how sales of the iPhone drove sales by attracting customers to other parts of the Apple ecosystem.
Though Cook presented a sunny outlook, some analysts have doubts over whether the demand can be sustained as economies begin to transition out of the Covid crisis.
“Current high levels of both iPad and Mac demand are unlikely to be sustainable as the world reopens, so another beat driven more by these areas may not be enough to drive the shares further,” Goldman Sachs’ Rod Hall wrote in a research note ahead of Apple’s earnings call.
Cook argued, however, that demand felt strong. “Where this pandemic will end, it seems like many companies will be operating in a hybrid kind of mode,” Cook said.
Apple is navigating uncertainties around a microchip shortage that’s expected to last into next year. Computer chips, which are essential to Apple’s product-lines, have been in short supply since last summer after chip factories were disrupted in the midst of the pandemic. The backlog was complicated by bumps in demand, former President Trump’s trade war, and the shift to 5G. Joe Biden’s $2tn infrastructure plan includes roughly $50bn to invest in domestic production of the chips, but it can take years to get the complex factories up and running.
Sidney Ho, an analyst at Deutsche Bank, another investment bank, said the supply chain disruption could cost Apple between $3bn and $4bn between April and June.
Apple is also facing increased scrutiny from US lawmakers – along with other big tech companies like Google and Facebook – over possible antitrust violations. In a Senate antitrust hearing last week, smaller tech companies criticised the company, saying it acts as a gatekeeper and uses its giant platform to squash competition. The day before the hearing, Apple introduced its new AirTags, which enabled users to track items with their iPhone’s “Find My” software, a device some believe was copied from a similar Samsung product.