Apple has warned investors that its future suite of new products may never be as profitable as the iPhone.
The company issued the warning in a recent securities filing as part of a list of “risk factors” that could weigh down the business.
Apple, which was recently supplanted by AI chip maker Nvidia as the world’s most valuable company, last week reported 6% increase in revenue for the most recent quarter though it said that it expects weaker growth during the current quarter.
“New products, services and technologies may replace or supersede existing offerings and may produce lower revenues and lower profit margins which can materially adversely impact the company’s business…,” Apple said in the Sept. 28 filing with the Securities and Exchange Commission.
Apple’s warning was contained in its most recent 10-K regulatory filing – an annual report on a company’s finances that publicly traded companies are required to submit to the SEC.
In years past, Apple was not as direct on its 10-K filing when discussing new products and their potential profitability, according to Financial Times.
Instead, the company referred to new product introductions as having “higher cost structures.”
Apple also said in the filing that it was keeping an eye on “geopolitical tensions” that could potentially impact sales.
The Cupertino, Calif.-based company has been investing in AI in an effort to catch up to tech rivals such as Google and Meta.
Fourth-quarter sales of Apple’s iPhone, the company’s main product, were up 5.5% to $46.22 billion, compared with analyst estimates of $45.47 billion. Other product lines missed expectations.
Apple’s fiscal fourth quarter ended Sept. 28, meaning it reflects only a few days of sales of its iPhone 16 series that went on sale Sept. 20.
Apple CEO Tim Cook told Reuters that iPhone 16 sales grew faster than iPhone 15 sales did a year earlier, with both phones on sale for the same number of days in the fourth quarter.
The rollout of Apple’s artificial-intelligence strategy, which it revealed this year, hinges on how well its new phones sell.
Rather than introduce AI in a standalone app or service, Apple has sprinkled Apple Intelligence throughout its most recent operating systems as new features, such as the ability to help re-write an email in a more professional tone.
Those features will mostly be available on iPhone 16 models, which feature more powerful computing chips, although the pro versions of the iPhone 15 both work with Apple Intelligence.
Sales in Apple’s services business, which includes iCloud storage and Apple Music, were $24.97 billion, compared with analyst expectations of $25.28 billion, according to LSEG.
Mac and iPad sales were $7.74 billion and $6.95 billion, respectively, compared to estimates of $7.82 billion and $7.09 billion, according to LSEG data.
Sales in Apple’s home and wearables business, which includes its Apple Watch and AirPods devices, fell to $9.04 billion, compared with estimates of $9.2 billion, according to LSEG.
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