Investing.com - Apple posted fiscal second-quarter results that beat Wall Street estimates on better-than-expected iPhone sales amid improving performance in China, but revenue from its high-margin services business fell shy of estimates.
Apple (NASDAQ:AAPL) fell nearly 3% in premarket trading Friday.
For the three months ended Mar. 31, Apple reported earnings of $1.65 per share on revenue of $95.36 billion. Analysts polled by Investing.com had anticipated EPS of $1.63 on revenue of $94.22 billion.
iPhone sales, which account for nearly half of total revenue, rose 1% to $46.84B in Q1 from $45.96B a year earlier, beating estimates of $45.84B.
The better-than-expected iPhone revenue comes as performance in China improved. Apple’s sales in Greater China were down 2% to $16 billion, compared with an 11% fall in the prior-year quarter.
Apple’s services segment, including includes its Apple Pay and App Store offerings, increased year-on-year to $26.65 billion from $23.87B, missing Wall Street estimates of $26.7B.
Wearables, home and accessories generated $7.52B in revenue, missing estimates of $7.95B, while Mac revenue was $7.95B, topping estimates of $7.77B.
Looking ahead, Apple guided for fiscal third-quarter 2025 revenue to grow in the low-to-mid single-digit year-over-year range. The company did not provide a separate revenue outlook for its Services segment.
Apple announced a $100B stock buyback program, $10B less than the record $110B announced in the prior quarter, and hiked its quarterly dividend by 4% to $0.26 a share.
Following the report, Citi analysts lowered their estimates for fiscal 2025, 2026, and 2027, citing the impact of tariffs. They also trimmed their price target to $240 from $245.
“Apple’s fundamentals remain intact, and the company delivered decent results/guide in a tough tariff environment,” analyst Atif Malik said.
Citi maintained a Buy rating, noting that the stock continues to screen as defensive on price-to-free cash flow and return on invested capital relative to other members of the Magnificent Seven.
Wells Fargo analysts also reiterated their Overweight rating on Apple but noted that with shares trading at a high-20s P/E multiple based on their revised calendar 2026 EPS estimate of $7.70, they would expect the shares to “remain range bound until tariff uncertainties lift.”
Yasin Ebrahim contributed to this report.