Apple (NASDAQ:AAPL) shares climbed around 4% in pre-market today after initially dipping in response to the company’s latest quarterly earnings. Investors were buoyed by the tech giant’s positive sales outlook for its fiscal second quarter, which exceeded market expectations and signaled steady demand for the iPhone.
Executives projected that Apple’s revenue would grow in the low- to mid-single digits in the coming quarter, a stronger-than-anticipated forecast that helped temper concerns about the company’s flagship iPhone sales. Despite a slight dip in iPhone revenue during the key holiday quarter, CEO Tim Cook noted that Apple’s new AI-powered features, known as Apple Intelligence, are gradually driving sales momentum. However, limited availability of these features in certain markets impacted results.
Apple has adopted a more conservative strategy toward AI compared to its Silicon Valley peers, avoiding massive investments in data center expansion. This cautious approach appeared to shield the company from broader tech market volatility earlier in the week, triggered by fears over the rise of low-cost AI models like DeepSeek.
For the quarter, Apple posted earnings of $2.42 per share, surpassing Wall Street’s estimate of $2.36. Revenue reached $124.3 billion, slightly above the forecasted $124.12 billion.
iPhone sales, which account for nearly half of Apple’s total revenue, slipped to $69.14 billion from $69.70 billion a year earlier, missing analyst projections of $71.03 billion. Meanwhile, the company’s services division, including Apple Pay and the App Store, delivered solid growth, with revenue rising 14% year-over-year to $26.34 billion, ahead of estimates.
However, Apple faced headwinds in China, where heightened competition led to an 11% decline in sales, falling to $18.5 billion, well below the $21.57 billion analysts had expected. The drop highlights ongoing challenges for Apple in maintaining its market share in the region amid fierce competition from domestic smartphone makers.