Investing.com - Apple reported Thursday third-quarter results that came ahead of Wall Street estimates, as a jump in services revenue helped offset softer iPhone revenue amid rising competition in China.
Apple Inc (NASDAQ:AAPL) shares were trading marginally down in premarket trading Friday.
The company reported Q3 earnings of $1.40 per share on revenue of $85.8 billion. Analysts polled by Investing.com had anticipated EPS of $1.35 on revenue of $84.45B.
Revenue rose 5% as services revenue helped offset a slight decline in iPhone revenue.
Sales of its flagship iPhone handset device, which still makes up nearly half of total revenue, fell to $39.30B from $39.67B a year earlier, but beat estimates of $38.81B.
"Expectations for Apple's Q3 were fairly tepid, given that multiple new products, most notably the iPhone 16, are expected later this quarter," analysts at Third Bridge commented.
"It's worth noting that Apple is often considered a company that provides conservative guidance and focuses on execution."
The highlight of the report was the Services segment, which saw its revenue surge 14% to a record high of $24.21B, beating Wall Street estimates of $24.01B.
Meanwhile, sales in China fell 6.5% to $14.72B as the iPhone has been facing rising competition in the region from local smartphone makers including Huawei.
The earnings call will dominate investor attention, with investors keen for details on guidance and Apple Intelligence.
"Overall numbers are ahead of expectations focus will be on GUIDE and Apple Intelligence commentary on the call but better China and stronger GMs are both better vs. buyside expectations," Evercore ISI said in a note following the results.
Looking ahead, Apple said that revenue for its fiscal fourth quarter is expected to grow at a rate comparable to the 4.9% increase recorded in the April-June period, also above analysts' expectations.
"This was an upbeat conference call in our view as stronger September guidance is just the opening act for the main event which is an AI-driven super cycle starting with iPhone 16 launching in mid-September," said Wedbush analysts, raising their price target on Apple stock from $275 to $285.
Yasin Ebrahim contributed to this report.