Apple’s blowout Q1 results were a reminder of what makes the company so impressive—and why it’s floundering in AI

Apple delivered the goods in its holiday quarter, ringing up billions more than expected in global iPhone sales and in its China business, while beefing up its already impressive profit margins and boasting more than 2.5 billion active Apple devices in the wild.

It was a reminder of CEO Tim Cook’s unparalleled mastery of the controls that keep the $3.8 trillion company humming.

But it was also a reminder of the challenges Apple faces, and the limits of the company’s leadership in a changing market. Apple proved once again that it can build, ship, and sell hardware better than anyone on the planet, especially when supply chains are under pressure. When it comes to a vision for AI however, Apple, and Cook, had shockingly little to say.

Result: Despite the blowout quarter, Apple’s stock floundered, gaining a scant 0.2% in after hours trading.

Starting with the good, Apple’s fiscal first quarter results were sterling. Revenue of $143.8 billion was up 16% year-over-year and well above the $138.5 billion expected by analysts. Net income increased 16% to $42.1 billion, or $2.84 per share, versus the $2.67 per share expected by analysts. 

The stars of the report were iPhone sales, which increased 23% year-on-year thanks to the new iPhone 17 model, and Apple’s business in Greater China, which surged 38% to $25.5 billion. Traffic in Apple’s retail stores in China were up by double-digit percentages from the prior year, Cook said, while sales of iPhones in China logged their best quarter ever.

The launch of the iPhone 17 family of phones has clearly energized a business that had started to slow. iPhone sales growth had averaged just 4.2% over the previous six quarters. But now so strong is the demand, Cook said, that Apple is constrained in its ability to get enough of the advanced 3-nanometer chips that power the phones. 

Tim Cook, of course, is a master of supply chains. Before replacing Steve Jobs as CEO, Cook was Apple’s longtime chief operating officer, overseeing the vast network of partners and suppliers that underpin Apple’s products. That prowess was on display on Thursday, with Apple forecasting healthy overall sales growth of 13% to 16% for the current quarter, and strong gross profit margins of 48% to 49% of revenue. 

One analyst on the earnings call proclaimed himself “shocked” by how strong Apple’s gross margins were expected to be. After all, the analyst noted, the prices of the memory chips used in Apple products are currently through the roof, and supply is severely constrained, because the chips are also in high demand for all the AI data centers being built.

Still a cipher on AI

At a time of market uncertainty, including wildcards like tariffs, Cook and Co. make a strong case that the business is in good hands. If only the company’s plan for AI was as reassuring. 

Asked about the company’s recent deal to partner with Google for AI capabilities in Siri, the timeline for return on investment in AI, and for other updates on its AI efforts, Apple executives served up canned non-answers. 

“We’re bringing intelligence to more of what people love and we’re integrating it across the operating system in a personal and private way, and by doing so it creates great value,” Cook said. 

What portion of Apple’s installed user base have phones that will have enough horsepower to run the advanced AI Siri due later this year? We can’t tell you, but it’s “growing,” Apple CFO Kevan Parekh replied.

To be sure, lots of companies are tight-lipped about product and strategy plans. Google is famous for dodging questions by reciting platitudes on its calls. The problem for Apple is that its AI efforts to date have been filled with embarrassing missteps and delays. The company promised advanced AI features two years ago, and has so far failed to deliver anything of note. The recently announced deal to use Google’s Gemini for the next version of Siri was widely viewed as an admission of Apple’s struggles developing its own AI models in house. 

Apple’s iPhone business is on fire again, but it’s not at all clear what Apple will have when the fire goes out.

This story was originally featured on Fortune.com