Shares in Apple fell in pre-market trading on Friday despite the company reporting first quarter earnings that beat expectations, as investors questioned the durability of a sharp sales rebound.
The iPhone maker posted earnings per share of $2.84 on revenue of $143.8bn (£105bn), compared with Bloomberg consensus estimates of $2.68 a share on revenue of $138.4bn. Revenue rose 16% from a year earlier.
Revenue for the iPhone climbed 23% year on year to $85.27bn, which Apple attributed to strong demand for the iPhone 17 models launched in September. Sales in China, a key market for the company, jumped 38% over the period.
Tim Cook, Apple’s chief executive, described the results as “a remarkable, record-breaking quarter” driven by “unprecedented [iPhone] demand, with all-time records across every geographic segment”.
The upbeat figures were met with a muted market response, however, as investors weighed concerns over rising costs, the sustainability of the sales surge and Apple’s AI strategy, which has suffered delays and the loss of senior staff to rivals.
Apple forecast revenue growth of between 13% and 16% year-on-year for the current quarter, ahead of Wall Street expectations of about 10%.
Shares in Microsoft were also lower in pre-market trading after plunging 10% in the previous session, as investors reacted nervously to a sharp increase in data centre spending and weaker than expected cloud growth, despite a strong uplift in profits driven by demand for AI services.
In quarterly results released after the US market close on Wednesday, Microsoft said adjusted net income rose 23% year on year to $30.9bn in the three months to the end of December, beating analysts’ expectations of $28.9bn. Revenue climbed 17% to $81.3bn, ahead of forecasts of $80.3bn.
Capital expenditure, including finance leases, reached $37.5bn in the quarter, up from $34.9bn in the previous three months and 66% higher than a year earlier. Microsoft has previously forecast capital spending of $140bn for its fiscal year, which ends in June.
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The $3.6tn technology group is engaged in a costly race with rival cloud providers such as Google (GOOG) and Amazon (AMZN) to expand the infrastructure required to support advanced AI systems.
Shares in Sandisk jumped more than 20% in pre-market trading on Friday after the data storage group reported a sharp rise in second quarter profits, fuelled by surging demand from data centres deploying artificial intelligence at scale.
Sandisk posted a profit of $803m, or $5.15 a share, compared with $104m, or 72 cents a share, a year earlier. Excluding one off items, adjusted earnings were $6.20 a share, well ahead of analysts’ expectations of $3.62 a share, according to FactSet. The company had previously guided for adjusted earnings of between $3 and $3.40 a share.
Revenue climbed to $3.03bn from $1.88bn in the same period a year earlier, exceeding analysts’ forecasts of $2.69bn. Sandisk had guided for revenue of between $2.55bn and $2.65bn. The company said data centre revenue rose 64% from the first quarter as technology companies rolling out AI systems boosted demand.
Looking ahead, Sandisk forecast revenue of between $4.40bn and $4.80bn for the fiscal third quarter, with adjusted earnings of $12 to $14 a share. It also expects a non-GAAP (Generally Accepted Accounting Principles) gross margin of between 65% and 67%.
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“Artificial intelligence continues to drive a step change in demand, with data center and edge workloads, expanding system complexity and storage content requirements,” chief executive David Goeckeler told analysts on a call. “NAND is now recognised as indispensable to the world’s storage needs,” he added, referring to the company’s flash memory technology.
Sandisk shares have nearly doubled since the start of January and are up almost 1,100% since August last year.
Shares in Caterpillar slipped 0.5% ahead of the US opening bell, after rising 3.4% in the previous session, as stronger sales driven by artificial intelligence spending were weighed against warnings of a multi-billion dollar hit from tariffs in the year ahead.
The world’s largest construction equipment maker said quarterly sales in its power and energy division, which produces generators, rose by more than 20%. The surge in AI investment has turned the segment into Caterpillar’s biggest business by sales, overtaking its core construction unit.
Orders are increasing for large generators designed to supply continuous power, chief executive Joe Creed said on a call with analysts after the results, as data centre operators seek additional on site electricity capacity to support rapid expansion. “Orders are rising for ‘prime power’ systems, large generators designed to provide continuous, around-the-clock electricity,” he said.
On an adjusted basis, Caterpillar earned $5.16 a share in the quarter to December 31, compared with $5.14 a year earlier. Revenue rose to $19.1bn from $16.2bn. Analysts had expected earnings of $4.68 a share on revenue of $17.86bn, according to LSEG.
The company also warned that tariff-related costs could total about $2.6bn in 2026. The absolute value of tariffs imposed last year was $1.8bn, it said.
In London, shares in AstraZeneca were flat after the drugmaker announced a partnership with China’s CSPC Pharmaceutical Group to accelerate the development of experimental treatments for obesity and diabetes, in a deal valued at $18.5bn (£13.4bn), as it seeks to deepen its presence in the fast-growing market.
Under the agreement, the FTSE 100 (^FTSE) group will gain exclusive global rights outside China to CSPC’s once a month dosing technology for weight management, aimed at providing a more convenient alternative to daily injections. The companies will also work together on four additional programmes using CSPC’s long acting technology platforms and its artificial intelligence driven peptide drug discovery capabilities.
Sharon Barr, executive vice president and head of biopharmaceuticals research and development at AstraZeneca, said: “This strategic collaboration advances our weight management portfolio by delivering novel assets which complement our existing programmes.
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“It will provide access to CSPC’s proprietary, AI-enabled, peptide capabilities and platform technology, which have the potential to transform the treatment of obesity, helping to address adherence and convenience as key barriers to long-term therapeutic success.
“This is an important step in creating a portfolio of simple, scalable and sustainable options that can help people with obesity, and weight-related complications live better, healthier lives.”
Dongchen Cai, chairman of CSPC, described the agreement as a “win-win collaboration”.
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