Nasdaq 100: Apple Falls 1.6% After Hours as iPhone Sales Miss Raises Concerns

Apple Beats on Earnings but Misses iPhone Sales Expectations, China Weakness Weighs

Apple reported mixed first-quarter results, topping earnings and revenue estimates but falling short on iPhone sales and seeing a steep decline in China revenue. While overall sales rose 4%, weaker-than-expected demand for Apple’s flagship product and a double-digit drop in Greater China sales pressured investor sentiment.

Daily Apple IncDuring the extended session, Apple stock is trading $233.80, down $3.79 or -1.60%.

How Did Apple’s Key Segments Perform?

The tech giant reported earnings per share of $2.40, surpassing analyst expectations of $2.35. Revenue came in at $124.30 billion, slightly ahead of the $124.12 billion estimate. However, iPhone revenue totaled $69.14 billion, missing projections of $71.03 billion, marking Apple’s biggest iPhone sales miss in two years.

Mac and iPad segments posted strong gains, with Mac revenue jumping 15% to $8.99 billion, beating estimates of $7.96 billion. iPad revenue also surged 15% to $8.09 billion, exceeding expectations of $7.32 billion. Apple’s Services division, a key profit driver that includes subscriptions and licensing deals, generated $26.34 billion, up 14% from the prior year and ahead of forecasts.

Why Did China Sales Drop Over 11%?

Sales in Greater China, including Hong Kong and Taiwan, fell 11.1% to $18.51 billion, the biggest decline since last year’s December quarter. CEO Tim Cook cited three factors impacting performance: inventory adjustments, the lack of Apple Intelligence availability in China, and a post-quarter government subsidy that could aid future sales.

Cook also noted that iPhone demand was stronger in markets where Apple Intelligence had rolled out. Currently, the AI-driven software suite is only available in select English-speaking regions, leaving China without access.

Wearables and Other Products See Weakness

Apple’s wearables category, which includes the Apple Watch, AirPods, and Beats products, declined 2% year-over-year to $11.75 billion, slightly below expectations of $12.01 billion. Despite launching new Mac and iPad models, including the iMac, Mac Mini, and MacBook Pro, the company’s “Other Products” segment failed to deliver growth.

What’s Next for Apple?

Apple did not provide formal guidance but is expected to share insight on the current quarter in its call with analysts. Wall Street projects March-quarter earnings of $1.66 per share on $95.46 billion in revenue.

Despite the China slowdown, Apple’s Services division remains a bright spot, with over 1 billion subscriptions contributing to 14% revenue growth. The company returned $30 billion to shareholders through dividends and buybacks, reaffirming its commitment to capital return.

Looking ahead, investors will monitor China’s demand recovery, further AI integration, and upcoming product launches, including potential iPad and Mac refreshes. Apple’s ability to sustain iPhone growth, particularly in international markets, will be critical to its stock performance in the coming quarters.

More Information in our Economic Calendar.