Apple’s upcoming quarterly earnings report is poised to capture attention as the tech giant grapples with its most significant revenue decline in over a year. Despite its longstanding status as a Wall Street darling, Apple’s stock has underperformed compared to other tech giants, facing concerns over sluggish adoption of AI services and heightened competition, particularly from Huawei in the crucial Chinese market.

Analysts anticipate a notable drop in iPhone sales, a cornerstone of Apple’s revenue, reflecting a 10.4% decline in the first quarter of 2024. This dip, the steepest in over three years, comes after a surge in sales during the same period last year, fueled by pent-up demand following pandemic-related disruptions.

Even factoring in the extraordinary circumstances of the previous year, expectations for iPhone sales remain muted, contributing to an estimated 5% decline in Apple’s total revenue for the second fiscal quarter. This would mark Apple’s most significant revenue decline since the end of 2022, when revenue fell by 5.5%.

Amid weakening financial performance and declining market value, Apple has embarked on efforts to revitalize its flagship device, exploring collaborations with OpenAI and Google to integrate generative AI features into future iPhone models. Such enhancements could reignite consumer interest and drive demand for the upcoming iPhone series.

While rivals like Microsoft, Alphabet, and Meta have showcased their AI strategies, Apple’s CEO Tim Cook has been relatively reserved on the topic. Nevertheless, the integration of AI features could bolster Apple’s competitive position against Huawei and Samsung, both of which have emphasized AI capabilities in their latest smartphone offerings.

Analysts foresee potential tailwinds for Apple’s iPhone 16 cycle, buoyed by replacement cycle dynamics and innovative AI features. Additionally, the company’s Services segment, encompassing offerings like the App Store and Apple TV, is expected to remain a bright spot, with projected revenue growth of 7.7%.

As Apple navigates challenges in its hardware business, including softer demand for iPads and Macs, the company is doubling down on product innovation. A revamped iPad lineup and upgrades to Mac models, featuring faster, AI-focused M4 processors, are on the horizon, signaling Apple’s commitment to staying at the forefront of technological advancement.

Despite recent uncertainties, Thursday’s earnings report may shed light on Apple’s resilience and its strategic initiatives to drive growth in an increasingly competitive landscape. With investor sentiment closely tied to the company’s performance, all eyes will be on Apple as it charts its course for the future.