Apple Inc. reported fiscal third-quarter financial results today that beat Wall Street’s expectations, sending its stock higher in after-hours trading.

The bad news is that the company was barely able to keep growing, with revenue up just 2% from the same period a year ago.

The iPhone and Mac maker reported earnings before certain costs such as stock compensation of $1.20 per share, down 8% from a year earlier. Revenue reached $83 billion, a new company record for the third quarter, with net income coming to $19.44 billion, down from $21.74 billion one year ago.

The results just beat Wall Street’s expectations. Analysts had been looking for earnings of $1.16 per share on sales of $82.81 billion. Following the report, Apple’s stock rose almost 3% in the extended trading session.

Apple Chief Executive Tim Cook (pictured) put forth a positive spin on the results and took the opportunity to mention once again that “we are leading with our values, and expressing them in everything we build, from new features that are designed to protect user privacy and security, to tools that will enhance accessibility, part of our longstanding commitment to create products for everyone.”

Cook’s optimistic tone could not hide the fact that Apple’s growth has slowed to a snail pace, however. One year earlier, the company grew its revenue by 36%, and even in the previous quarter it managed to generate 8% growth. Apple Chief Financial officer Luca Maestri admitted that the company faced a “challenging operating environment.”

Analysts say economic uncertainty this year has led lower demand for smartphones, personal computers and other tech hardware, with consumers grappling with fears of a recession and runaway inflation. Apple’s soft growth in the quarter just gone indicates that the consumer electronics industry could be about to enter a sustained period of slower or even no growth at all.

For now, though, Apple is eking out extra revenue and it was mostly thanks to its iPhone business, which grossed $40.67 billion in the quarter, up 3% from a year earlier and exceeding Wall Street’s expectations. The company said demand for its iPhone 13 models stayed strong. Typically, Apple releases new iPhone models in September, resulting in falling sales as customers wait for an upgrade.

In an interview with CNBC, Cook said Apple had continued success in attracting Android smartphone users to buy iPhones instead. “We had a record level of switchers and saw double-digit growth for customers new to the iPhone,” he insisted.

That was just as well, because all three of Apple’s other hardware categories saw sales fall in the quarter. For instance, Mac computers saw sales decline by 10%, to just $7.38 billion, below expectations. Cook said Mac revenues were hit by supply chain constraints and a strong U.S. dollar.

Meanwhile, iPad revenue fell 2% to $7.22 billion, while the “Other” category, which includes the Apple Watch, AirPods and other devices, saw sales fall by 8%, to $8.08 billion.

The results from Apple’s services business, which includes everything from Apple Music and Apple TV+ to iCloud and AppleCare+, were more encouraging, with revenue rising by 12% to $19.6 billion. However, that growth was slower than the 17% gain it made in the previous quarter, and down from the 27% growth it saw one year earlier. Cook said Apple ended the quarter with 860 million current paid subscriptions, which includes those users who are subscribed to any app sold through the App Store, as well as its own products.

Holger Mueller of Constellation Research Inc. said that he thought Apple did well overall, with the main problem being that its costs increased faster than its revenues, resulting in lower profit and earnings per share.

“Once again, when Apple faces headwinds, it relies on the iPhone, which was the only hardware offering that saw growing revenues,” Mueller noted. “However the combined losses of Mac, iPad and wearables outpaced the iPhone gains, so that’s a possible inflection point for Apple. Not surprisingly, services kept growing, though it’s clear that Apple isn’t immune from wider industry trends here either. All eyes are now on the fourth quarter, because operating environments never give high-tech vendors a break.”

Apple had warned three months ago that supply chain problems would likely result in a revenue hit of between $4 billion and $8 billion. That was evident on the company’s website, which has shown extended shipping times for many Mac models, for instance. Cook said the company ultimately took a hit of about $4 billion during the quarter.

Apple’s biggest market, Greater China, which includes sales in Hong Kong and Taiwan, saw revenue fall by 1% to $14.6 billion. Cook said that was a good result considering that the Zero Covid policy in China and ongoing shutdowns there had hurt demand for its products.

Elsewhere, Apple said its gross margin of 43.26% exceeded its own forecast from three months ago of between 42% and 43%. The company added that it spent $28 billion in share buybacks and dividends during the quarter.

As has been the case since the beginning of the COVID-19 pandemic, Apple declined to offer guidance for the next quarter. However, Cook told CNBC he expects revenue to accelerate in the quarter, albeit with “some pockets of softness.” Wall Street analysts expect the company to deliver fourth-quarter earnings of $1.31 per share on revenue of about $90 billion. Apple previously delivered revenue of $83.4 billion in the fourth quarter of fiscal 2021.

Photo: Fortune Photo/Flickr