Apple Inc. delivered strong results for its fiscal first quarter today, notably cutting a streak of four successive quarters of revenue declines.

However, with sales falling more than 13% in the all-important Chinese market, and a warning of weakness in iPhone sales over the current quarter, the company’s stock dipped in extended trading.

The iPhone maker reported first-quarter fiscal 2024 earnings before certain costs such as stock compensation of $2.18 per share, beating the Street’s forecast of $2.10 per share, while revenue rose 2%, to $119.58 billion, ahead of the $117.91 billion analyst target. All told, the company delivered a net profit of $33.91 billion for the quarter, up from $29.9 billion one year earlier.

Apple did not provide official guidance for the current quarter, in what has become a standard procedure ever since the onset of the COVID-19 pandemic. But in a conference call, Apple’s finance chief Luca Maestri said the company expects iPhone sales in the current quarter to be similar to last year, when it generated $51.33 billion in revenue, after taking out $5 billion worth of sales attributed to outperformance at a time when supply was recovering from pandemic-related shutdowns.

Maestri also said Apple expects its total revenue for the second quarter to remain more or less flat from a year earlier, once again after deducting the $5 billion in iPhone sales. Services revenue is expected to grow at around 11%.

Investors were not too enthusiastic about Maestri’s comments. After making a slight gain immediately after the results were published, Apple’s stock quickly went into reverse, and it was down more than 3% in after-hours trading.

At least it must have been a relief for investors to see Apple finally growing again after posting revenue declines in the previous four quarters. The company’s gross margin also increased, hitting 45% in the quarter.

In an interview with CNBC post-earnings call, Apple Chief Executive Tim Cook (pictured) insisted that some of the company’s growth rates were a “huge acceleration” from the prior quarter. He pointed out that the quarter has one fewer week compared to the prior year, given the way Apple’s corporate calendar works. Whereas last year there were 14 weeks in the first quarter, there were just 13 weeks in the first quarter of fiscal 2024, he said.

Despite having one less week, Apple reported iPhone revenue of $69.7 billion for the quarter, up by almost 6% from a year earlier and ahead of the Street’s forecast of $67.82 billion. That’s a positive sign that suggests the new iPhone 15 models launched in September have been well received.

The extremely profitable services business, which includes subscriptions to Apple Music, warranties, advertisements, Apple Pay revenues and more, also showed decent growth, with sales rising 11% to $23.11 billion during the quarter, though that came in just shy of Wall Street’s target of $23.35 billion. Investors watch the services business closely, as they believe it’s one of the company’s biggest growth areas.

According to Apple, the company now has 2.2 billion active devices in use. That’s a key metric that helps to inform analysts on the unit’s growth prospects, and is up from just 2 billion active devices one year earlier.

Cook said the services growth was thanks to improvements in its advertising, payments and cloud services segments. He noted that the company now has more than 1 billion active paid subscribers.

Zooming out, Apple displayed growth in all regions except for the key market of China, where sales dipped 13%. The company is facing intense competition there from domestic smartphone makers such as Huawei Technologies Co. Ltd., and its struggles there will be a concern for investors, said analyst Holger Mueller of Constellation Research Inc. “The revenue loss in China is more or less equivalent to the overall growth it showed in the quarter, so the company would have doubled its revenue growth had it not lost business there,” Mueller explained. “Investors will be watching closely to see if Apple can return to growth in China in the coming financial year.”

Elsewhere in Apple’s business, Mac revenue remained largely unchanged from a year earlier at $7.7 billion, though that actually represents an improvement, considering sales were down 34% on an annual basis in the previous quarter. Wall Street had forecast $7.73 billion in Mac sales.

On the other hand, iPad sales fell once again, down more than 25% from a year earlier. Revenue came to $7.02 billion, falling short of the Street’s forecast of $7.33 billion. It is notable, though, that Apple didn’t release a new iPad model last year, the first time in its history that it has failed to do so.

Cook said the slump in iPad sales was expected by the company. “The iPad faced a very difficult comp, if you recall, in the year-ago quarter where we launched the iPad Pro and iPad 10th generation,” he said.

Finally, there’s Apple’s wearables business, which is referred to as “other products” and includes sales of its AirPods headphones and the Apple Watch. The unit was a bright spot for Apple, with sales of $11.95 billion coming in ahead of the $11.56 billion expected, though they were still down 11% from a year earlier. No doubt, sales there were impacted by the forced removal of the company’s latest watches from Apple stores in December, which occurred because of a patent dispute with the medical device company Masimo Corp.

Mueller said Apple deserved credit for putting an end to its streak of four successive quarters of shrinking revenue, even if it was aided by the traditionally strong holiday quarter. “The growth in services will please investors, but it is not much of a surprise as Apple has been growing its installed base of devices and platforms that consume those services,” Mueller said. “Going forward, investors will want to see a return to growth in China, and they will also keep an eye out for the brand new Apple Vision Pro headset to see if it can make a difference in the company’s sluggish wearables business.”

In an encouraging sign for investors, Cook also hinted that the company plans to dive deeper into artificial intelligence, saying that it may have a big announcement coming up later this year. He didn’t provide any details but indicated that the company wants to compete with Microsoft Corp., Google LLC, Amazon.com Inc. and OpenAI in the generative AI industry.

“As we look ahead, we will continue to invest in these and other technologies that will shape the future,” Cook told analysts on a conference call. “That includes artificial intelligence where we continue to spend a tremendous amount of time and effort, and we’re excited to share the details of our ongoing work in that space later this year.”

Photo: The Climate Group/Flickr