Apple’s stock surges after positive forecast and historic buyback announcement.

Apple Inc. saw a surge in its shares during after-hours trading following the announcement of better-than-anticipated sales in the previous quarter and a forecast of growth in the upcoming period. This has raised hopes that the company’s slowdown may be coming to an end.

While revenue fell 4.3% to $90.8 billion in the March quarter, it was better than analysts’ forecast of $90.3 billion. The profit also beat Wall Street forecasts during the period, and Apple announced the largest share buyback in US history.

The results were a relief to investors who have been waiting for the iPhone maker to pull out of a long slump. Apple’s sales have fallen in five of the last six quarters, hurt by a sluggish smartphone market and headwinds from China. The company had warned analysts in February that the net sales for the latest period would be about 5% less than a year earlier.

This season, Apple expects sales to increase by a percentage in the low single digits. The company predicted that both its iPad and services businesses will grow at double-digit rates, but declined to give a forecast for the iPhone — its flagship product.

Shares rose 7.9% in extended trading Thursday after the report was released. Apple had fallen 10% to $173.03 this year through the close.

Earnings per share were $1.53 in the fiscal year ended March 30. That beat analysts’ estimates of $1.50. Apple raised its dividend by 4 percent to 25 cents per share, in line with expectations. And the board approved plans to buy back $110 billion of the company’s stock.

The lack of innovative new devices has partly slowed down sales at Apple, but the company plans to begin to remedy the situation on May 7. That’s when it plans to unveil new iPads — the first updates to its tablet lineup in 1 1/2 years.

The Cupertino, California-based company is also planning long-awaited developments in generative artificial intelligence. In June, CEO Tim Cook is expected to present Apple’s AI strategy at its annual Worldwide Developers Conference.

“We are making significant investments in the space,” CFO Luca Maestri told Bloomberg Television’s Emily Chang. “We think we’re in a good position.”

Cook said Thursday that Apple differentiates itself from its AI rivals by tightly integrating hardware and software, using internal chips and prioritizing privacy and security.

Apple’s slowdown in China has been particularly worrying for investors in recent months. There, consumers flock to domestic smartphone brands, and the government has banned the use of foreign technology in some offices.

Counterpoint Research estimates that iPhone sales in China fell 19% in the first three months of the year, the worst quarter for the product since 2020. Globally, shipments of the device fell nearly 10% in the quarter, according to IDC, the steepest. a drop after Covid lockdowns hampered supply chains in 2022.

Against this background, Apple’s China results were more positive than expected. In the last quarter, the company generated 16.4 billion dollars in turnover from China. Although the figure was lower than a year earlier, it handily exceeded analysts’ forecast of $15.9 billion.

Maestri said China’s concerns were exaggerated. “We are pleased with our results in China,” he said. “The reality is different from what you sometimes read.”

Cook also shot down the idea that the iPhone is suffering in the country, saying that revenue from the device grew in mainland China. The weakness came from other parts of the business, he said.

“The other products didn’t do as well,” he said on a conference call. “And so we clearly have work to do there.”

At the same time, Apple has not shown that new product groups can revive growth. It canceled work on a self-driving car in February, eliminating a project that some had hoped would become one of its famous “next big things.”

The company broke into the mixed reality headset market this year when the Vision Pro debuted on February 2nd. But this product has gotten off to a slow start, and it could be years before it adds significantly to Apple’s revenue. Apple did not release sales figures for the Vision Pro on Thursday, but said the device is generating interest among business customers.

The company’s biggest moneymaker is still the iPhone, which accounts for about half of sales. Product revenue was $46 billion in the second quarter, beating estimates of $45.8 billion. That was a steep drop from Apple’s $51.3 billion in the year-ago quarter — despite the latest model being seen as a major upgrade.

Apple plans to update the iPhone this year with slightly larger screens and new chips focused on artificial intelligence. The Pro models also add a new button for saving photos and videos, but otherwise look the same as the current versions.

The iPad business continued to decline in the last quarter, with revenue of $5.56 billion. This left the average analyst estimate of $5.91 billion. For the first time in the product’s history, Apple went an entire calendar year without updating the iPad’s hardware. The device will do better in the current quarter, and the pent-up demand will help the fuel sales of the models to be announced next week.

Mac revenue was $7.45 billion, beating forecasts of $6.79 billion. The business gained momentum from the new MacBook Air, which was updated in March with an M3 chip. Apple plans to release its first M4-powered Macs later this year, adding a new focus on artificial intelligence features, Bloomberg News reports.

Apple’s Wearables, Home and Accessories segment brought in $7.91 billion in revenue. This equates to an estimate of $8.29 billion and is down nearly 10% from the year-ago quarter. The latest Apple Watch models were only minor updates, and the company has not settled lawsuits related to disabling blood oxygen saturation calculation.

Services were a relative bright spot, with revenue up 14 percent to $23.9 billion. That beat Wall Street expectations of $23.3 billion. The category includes Apple Music, a TV streaming platform and iCloud subscriptions, but its revenue comes mainly from the App Store.

This business is under pressure from regulators, and Apple is forced to allow third-party marketplaces and payment services in the European Union. Depending on how Apple fares in its legal battles with the Justice Department, it may have to make changes in the US as well.

During the call, Apple executives touted the company’s growth in emerging markets. This includes an all-time revenue record in Indonesia, which Cook visited last month during a tour of Southeast Asia.

“In this market, our market share is low,” Cook said. – Populations are large and growing. And our products are making a lot of progress.”