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Apple CEO Tim Cook (C) joins customers during Apple’s iPhone 16 launch in New York on September 20, 2024. 

Timothy A. Clary | Afp | Getty Images

Apple’s second-largest division after the iPhone has turned into a $100 billion a year business that Wall Street loves.

In Apple’s earnings report on Thursday, the company said it reached just under $25 billion in services revenue, an all-time high for the category, and 12% growth on an annual basis.

“It’s an important milestone,” Apple CFO Luca Maestri said on a call with analysts. “We’ve got to a run rate of $100 billion. You look back just a few years ago and the the growth has been phenomenal.”

Apple first broke out its services revenue in the December quarter of 2014. At the time, it was $4.8 billion.

Apple’s services unit has become a critical part of Apple’s appeal to investors over the past decade. Its gross margin was 74% in the September quarter compared to Apple’s overall margin of 46.2%.

Services contains a wide range of different offerings. According to the company’s SEC filings, it includes advertising, search licensing revenue from Google, warranties called AppleCare, cloud subscription services such as iCloud, content subscriptions such as the company’s Apple TV+ service, and payments from Apple Pay and AppleCare.

On a January 2016 earnings call, when the reporting segment was relatively new, Apple CEO Tim Cook told investors to pay attention.

“I do think that the assets that we have in this area are huge, and I do think that it’s probably something that the investment community would want to and should focus more on,” Cook said.

Over the years, Apple has compared its services business to the size of Fortune 500 companies, which are ranked by sales, to give a sense of its scale. After Thursday, Apple’s services business alone, based on its most recent run rate, would land around 40th on the Fortune 500, topping Morgan Stanley and Johnson & Johnson.

Services appeals to investors because many of the subscriptions contained in it are billed on a recurring basis. That can be more reliably modeled than hardware sales, which will increase or decrease based on a given iPhone model’s demand.

“Yes, the the recurring portion is growing faster than the transactional one,” Maestri said on Thursday.

Apple’s fourth-quarter results beat Wall Street expectations for revenue and earnings on Thursday, but net income slumped after a one-time charge as part of a tax decision in Europe. The stock fell as much as 2% in extended trading.  

Apple boasts to investors that its sales from Services will grow alongside its installed base. After someone buys an iPhone, they’re likely to sign up for Apple’s subscriptions, use Safari to search Google, or buy an extended warranty.

Apple also cites a “subscription” figure that includes both its first-party services, such as Apple TV+ subscriptions, and users who sign up to be billed by an App Store app on a recurring basis.

The company said the installed base and subscriptions hit all-time-highs, but didn’t give updated figures. Apple said it had 2.2 billion active devices in February, and in August said it had topped 1 billion paid subscriptions.

Still, Apple faces questions about how long its services business can continue growing at such a rapid rate. Between 2016 and 2021, the unit sported significantly higher growth, reaching 27.3% at the end of that stretch.

In fiscal 2023, services growth dropped to 9.1% for the year, before recovering to about 13% the next year. Apple told investors that it expected services growth in the December quarter to be about what it was in fiscal 2024.

Cook was asked on Thursday what Apple could do to make some of its services and its Apple One subscription bundle grow faster.

“There’s lots of customers to try to convince to take advantage of it,” Cook said. “We’re going to continue investing in the services and adding new features. Whether it’s News+ or Music or Arcade, that’s what we’re going to do.”

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Oracle’s Federal Electronic Health Record experienced a nation-wide outage

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Oracle's Federal Electronic Health Record experienced a nation-wide outage

Jaque Silva | Nurphoto | Getty Images

Oracle’s Federal Electronic Health Record experienced a nation-wide outage on Tuesday, the Department of Veterans Affairs confirmed to CNBC.

The agency said “all users” of the company’s Federal EHR, including the VA, the Department of Defense, the U.S. Coast Guard and the National Oceanic and Atmospheric Administration, were impacted. Six VA medical centers, 26 community clinics, and remote VA sites experienced disruptions, the agency said.

“Affected VA medical facilities followed standard contingency procedures during the outage to ensure continuity of care for Veterans,” a VA spokesperson said in a statement Thursday.

An electronic health record, or an EHR, is a digital version of a patient’s medical history that’s updated by doctors and nurses. It’s crucial software within the U.S. health-care system, and outages can cause serious disruptions to patient care.

Oracle is one of the largest EHR vendors thanks to it’s $28 billion acquisition of the medical records giant Cerner in 2022. 

The company’s Federal EHR initially started experiencing issues at around 8:37 a.m. Eastern on Tuesday, the VA said. Users reported that the software froze and they were unable to access applications. Access was restored and cleared by 2:05 p.m. Eastern that day after Oracle restarted the system.

Oracle is carrying out an investigation to determine what caused the outage, the VA said. Oracle did not immediately respond to CNBC’s request for comment.

The outage marks Oracle’s latest stumble in a thorny, years-long EHR rollout with the VA, which has been marred by patient safety concerns. The agency launched a strategic review of Cerner in 2021, before Oracle’s acquisition, and it temporarily paused deployment of the software in 2023.

Four VA facilities in Michigan are slated to deploy Oracle’s Federal EHR in 2026.

In October, Oracle unveiled a brand-new EHR equipped with fresh cloud and artificial intelligence capabilities. The early adopter program for the software begins this year, though it’s not clear if the VA has plans to utilize it.

Oracle is slated to report third-quarter fiscal 2025 earnings on Monday.

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Broadcom shares soar 16% as earnings top estimates on demand for custom AI chips

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Broadcom shares soar 16% as earnings top estimates on demand for custom AI chips

Broadcom CEO Hock Tan.

Lucas Jackson | Reuters

Broadcom reported first-quarter earnings on Thursday that topped analysts’ expectations, and the chipmaker offered strong guidance for the current quarter. The stock jumped 16% in extended trading.

Here’s how the company did versus LSEG consensus estimates:

  • Earnings per share: $1.60 adjusted vs. $1.49 expected
  • Revenue: $14.92 billion vs. $14.61 billion expected

Broadcom said it expects about $14.9 billion in second-quarter revenue, higher than the $14.76 billion forecast by Wall Street analysts. Revenue in the last quarter rose 25% from $11.96 billion a year earlier.

The company said net income increased to $5.5 billion, or $1.14 per share, from $1.33 billion, or 28 cents per share, in the same period last year.

Broadcom’s artificial intelligence business is at the center of the company’s recent boom, which saw its stock price more than double last year. The company is one of the primary data center infrastructure vendors for AI, working both on Google’s custom AI chips as well as providing essential components for networking thousands of other chips together to develop advanced AI software.

Prior to the after-hours pop, the stock was down about 23% so far in 2025, as investors rotate out of risk partly due to concern about President Donald Trump’s tariffs.

Broadcom said it recorded $4.1 billion in AI revenue during the first quarter, which is 77% higher on a year-over-year basis. Those sales are reported as part of Broadcom’s semiconductor solutions business, which grew 11% on an annual basis to $8.21 billion during the quarter.

Broadcom CEO Hock Tan said in a statement that the company expects “continued strength in AI semiconductor revenue,” reaching a projected $4.4 billion in the second quarter.

In December, Broadcom said it was developing custom AI chips with three large cloud customers. Tan said on Thursday that in addition to those customers, it had “deeply engaged” with two other hyperscalers, and are working with four other potential customers to develop their own custom AI chips.

Tan said that Broadcom closely chooses partners for developing custom AI chips who can deploy the resulting product in large quantities. “To put it bluntly, we don’t do it for startups,” Tan said.

The other major part of Broadcom’s revenue comes from its infrastructure software division, which includes software from the company’s acquisition of VMware in the fourth fiscal quarter of 2023. Broadcom said it saw $6.7 billion in software sales during the quarter, a 47% increase on an annual basis.

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HPE to cut 2,500 employees as stock slides 19% on weak earnings outlook

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HPE to cut 2,500 employees as stock slides 19% on weak earnings outlook

Antonio Neri, CEO of Hewlett Packard Enterprise, speaks during an interview with CNBC on the floor of the New York Stock Exchange (NYSE) in New York City, October 20, 2023.

Brendan McDermid | Reuters

Hewlett Packard Enterprise shares slid 19% in extended trading on Thursday as the data center equipment maker issued quarterly and full-year guidance that came in below consensus.

Here’s how the company did in the fiscal first quarter in comparison with LSEG consensus:

  • Earnings per share: 49 cents adjusted vs. 49 cents expected
  • Revenue: $7.85 billion vs. $7.82 billion expected

HPE’s revenue rose 16% year over year in the quarter ending on Jan. 31, according to a statement. The company was left with profit of $598 million, or 44 cents per share, up from $387 million, or 29 cents per share, in the same quarter a year earlier. The adjusted earnings per share excludes stock-based compensation.

“We could have executed better,” CEO Antonio Neri said on a conference call with analysts. The company had higher than normal inventory for artificial intelligence servers because of a shift to next-generation Blackwell graphics processing units from Nvidia.

The backlog for AI systems rose 29% quarter over quarter to $3.1 billion. Total server revenue totaled $4.29 billion.

HPE dealt with extensive discounting in the market while selling traditional servers during the quarter, finance chief Marie Myers said. As the quarter progressed, HPE moved to limit travel and discretionary spending, she said.

“We expect pricing adjustments may negatively impact top-line growth in the near term,” Myers said.

The company said it would implement a cost-cutting program involving layoffs over the next 18 months that will lead to $350 million in gross savings by the 2027 fiscal year. Around 2,500 employees will be affected, a spokesperson said, representing about 5% of the workforce when also factoring in expected attrition. At the end of October, HPE employed 61,000 people, according to its most recent annual report.

In January, the U.S. Justice Department filed in a federal district court to stop HPE from acquiring Juniper Networks. HPE announced the proposed $14 billion deal in January 2024. The court expects a trial to begin in July, according to the statement. The deal should close by October 2025, HPE said. In December, the company had said the transaction would be done in early 2025.

HPE called for 28 cents to 34 cents in adjusted earnings per share for the fiscal second quarter, with revenue coming in between $7.2 billion and $7.6 billion. Analysts surveyed by LSEG had looked for 50 cents per share on $7.93 billion in revenue.

For the 2025 fiscal year, HPE sees $1.70 to $1.90 in adjusted earnings per share. Analysts polled by LSEG had predicted $2.13 per share.

HPE expects to update its prices to reflect higher expenses from U.S. tariffs, Neri said, adding that he has not perceived any business deterioration from President Donald Trump’s so-called Department of Government Efficiency.

As of Thursday’s close, HPE shares were up about 2% so far in 2025, while the S&P 500 index was down 2%.

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