Sales of Apple iPhones declined at the end of last year, as the company’s introduction of new artificial intelligence (AI) features received a mixed reception.
Chief Executive Tim Cook noted that the new features contributed to stronger sales in markets like the US, where they were available.
However, iPhone sales overall fell by about 1% compared to the previous year, totaling $69.1bn (£55bn).
The company faces additional challenges, including a decline in sales in China and the potential impact of tariffs threatened by President Donald Trump.
These tariffs, which could reach up to 60%, would affect products manufactured in China, where Apple conducts much of its production.
The timing and specifics of the proposed tariffs remain uncertain, but Mr. Cook assured investors on Thursday that the company is closely monitoring the situation.
Apple began introducing AI features to its products last year, starting in the US, in an effort to reinvigorate sales as customers hold onto their devices for longer periods.
Investors are optimistic that these advancements will help reverse the sales slowdown. Mr. Cook also announced plans to expand the AI features to additional languages in April.
However, the AI rollout has not been without controversy. Earlier this month, the AI-powered news summary alerts faced criticism for repeatedly misinterpreting headlines, including some from the BBC. The feature was ultimately suspended after more than a week of backlash.
Despite these hurdles, Mr. Cook highlighted a promising trend: a record number of new iPhone purchases by existing iPhone users upgrading from older models.
The company said overall sales rose 4% to $124.3bn, lifted by a jump in its computer sales and strong growth in its services business, which includes Apple TV, Apple News and Apple Pay.
Profits rose 7% year-on-year to $36.3bn.
Emarketer analyst Jacob Bourne said Apple was going to have to have to speed up the roll-out and start looking at new kinds of products to maintain its edge.
“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.