Apple shares spike despite iPhone sales falling short of estimates

Apple has ended the week with a sizeable gain on the US stock market, despite the tech giant’s iPhone sales falling bellow estimates.

Apple reported solid profits on rising revenues Thursday, but the tech giant’s iPhone sales missed estimates as executives signalled a rising financial toll from the strong dollar.

Shares of Apple edged higher in after-hours trading, as the tech titan avoided a stumble akin to those experienced by Facebook parent Meta and Amazon, both of which have been punished by investors.

Profits edged up one per cent to $20.7 billion ($A32.2b), on an eight per cent rise in revenues to $90.1 billion ($A140.4b) in Apple’s fiscal fourth quarter ending September 24.

Results for the latest quarter “continue to demonstrate our ability to execute effectively despite a challenging and volatile macroeconomic backdrop,” said Apple Chief Financial Officer Luca Maestri.

*APPLE STOCK JUMPS 7% AFTER EARNINGS$AAPLpic.twitter.com/1gGb7kBnNJ

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Apple notched growth in most operating regions and product categories and released an earnings statement that contained no obvious red flags and showed the company still able to notch broadbased revenue growth.

Still, Apple’s smartphone revenues came in at $42.6 billion ($A66.4b), up about 10 per cent from the year-ago period, but a bit below the $43 billion ($A67b) projected by analysts.

The company also reported services revenue growth of just 5.0 per cent compared with the year-ago period – much below the 12 per cent jump in the prior quarter.

Some of the weakness in services stemmed from the impact of the strong dollar on overseas consumers, but executives also cited weakness in digital advertising and gaming, Maestri said.

While Apple avoided a specific forecast, Maestri cautioned analysts to expect revenue growth to “decelerate” in the fourth quarter, due in part to a foreign exchange hit of 10 percentage points.

Apple’s stock price has spiked despite iPhone sales falling short of estimates. Picture: Josh Edelson/AFP

Analysts described Apple’s results as respectable, but warned that the worsening consumer environment will pose challenges.

“Overall, we view the (September quarter) as a solid beat and see a good holiday selling season ahead, but do think conditions get more challenging as the iPhone 14 cycle extends given the uncertain economic conditions,” said CFRA Research analyst Angelo Zino.

“That said, we believe Apple’s prestige brand is allowing it to successfully increase prices to consumers across all devices and services.” Heading into earnings season, investors had expressed worries about the headwinds from the weakening global economy as central banks enact aggressive interest rate hikes to counter grinding inflation.

This week’s tech results have shown that the sector, which enjoyed outsized growth during the peak period of Covid-19, is not immune to these factors.

Shares of Apple rose 0.7 per cent to $145.87 ($A227.39) in after-hours trading.