Apple sales grew more slowly than analysts anticipated in China and its services business last quarter. Though total revenue topped estimates, the China sales amounted to $18.8 billion in the fiscal third quarter, well short of the $19.6 billion estimated by analysts. Revenue from services was $30.7 billion, compared with a $31.4 billion projection. Mark Gurman breaks down the numbers on "Bloomberg The Close."

Apple and Amazon both released their second quarter earnings on Thursday, a test of investor confidence in major tech companies amid growing concerns over exorbitant AI spending.

Apple revealed quarterly revenue of $109.4bn, beating Wall Street expectations of $108.65bn in revenue. It also reported $2.02 earnings per share, driven by sales of its marquee products such as iPhones and laptops.

Amazon reported that its revenue was $200.6bn compared with analyst predictions of $196.47bn. The company also grew its AWS cloud computing service and beat market expectations on advertising revenue, though free cash flow declined. Amazon's stock jumped more than 8% in immediate after hours trading.

It has been a tough month for several prominent tech companies, with shares in Tesla and Meta both plunging after they revealed huge spending on AI infrastructure in their latest earnings reports. A recent selloff in chip stocks like Nvidia, the result of loss in investor confidence and advances in Chinese chip manufacturing, has also rattled the market.

Investors have paid especially close attention in recent weeks to tech companies' free cash flow after large capital expenditures – largely on AI – have caused concern. As the industry continues to plow money into building out AI capabilities in search of future profits, shareholders have become more jittery when earnings reports reveal larger-than expected AI spending.

Apple, meanwhile, has benefitted from the chip stock selloff as investors viewed the company as a safe haven amid the broaderAI-driven volatility. The company's stock is up around 23% this year, leading the so-called Magnificent Seven tech stocks, which include Meta, Microsoft, Alphabet, Amazon, Tesla and Nvidia. Apple's stock price dropped slightly on Thursday following earnings after it reported its revenue from its services division was below market expectations.

Thursday's earnings call was also CEO Tim Cook's final report before he steps down after 15 years as Apple's top executive. Apple's market value grew immensely over Cook's tenure as chief executive, from around $350bn in 2011 to surpassing the $5tn mark days before Thursday's earnings call. Earlier this month the company overtook Nvidia to become the world's most valuable company.

Cook will be replaced by John Ternus, a longtime hardware engineering executive who has been at the company since 2001. Ternus stated earlier this week that he aims to expand the Apple's entertainment business, which has had success with movies like the blockbuster F1 and streaming series such as The Studio.

"As you know, this will be my final earnings call," Cook said on Thursday. "I am beyond excited for John to step into his new role and lead Apple into its next era. He is truly one of a kind and there is no better person to take the helm of the company."

Apple reported its strongest June quarter on record Thursday, with revenue of $109.4 billion up 16% from a year earlier and diluted earnings per share of $2.02 up 29% year over year.

Despite beating top-line estimates, Apple's services revenue came in at $30.74 billion, below analyst expectations of $31.22 billion, according to CNBC.

The stock fell roughly 3% to 4% in extended trading. Heading into Thursday, the stock had gained about 23% on the year.

iPhone revenue of $54.25 billion exceeded estimates of $53.86 billion, representing 22% growth year over year. Mac revenue of $10.35 billion topped an $8.74 billion estimate, but iPad revenue of $6.19 billion fell short of the $6.92 billion analysts had projected.

China revenue also disappointed. Sales in Greater China totaled $18.8 billion, well below analyst projections of $19.6 billion, according to Bloomberg.

Gross margin came in at 50.1%, including a roughly 2% boost from tariff refunds, the company said. Earnings per share also included an $0.11 benefit from tariff refunds. Net income rose to $29.79 billion from $23.43 billion in the same quarter a year earlier.

"Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac and Services, and in every geographic segment," Chief Executive Officer Tim Cook said in a statement.

The quarter is Cook's last as CEO, with the 65-year-old set to hand the role to hardware engineering chief John Ternus on Sept. 1.

Apple is grappling with a worldwide scarcity of memory chips and processors, a crunch that has pushed the company to increase prices on Macs and iPads. Customers have faced lengthening delivery delays on hardware such as the Mac mini and Mac Studio as a result.

Apple also recently reclaimed its position as the world's most valuable company, overtaking Nvidia with a market capitalization of nearly $5 trillion.

Apple on Thursday reported earnings and revenue that topped Wall Street expectations, though tariff refunds added 11 cents per share to earnings.

Why it matters: The report is the last of Tim Cook's tenure, with John Ternus set to take over as CEO on Sept. 1.

Driving the news: Apple reported per-share earnings of $2.02 on revenue of $109.4 billion, up 16 percent year over year.

• Analysts had been expecting per-share earnings of $1.89 on revenue just short of $109 billion, per Yahoo Finance.

Between the lines: Apple has recently raised prices on several products as it navigates tariffs and higher component costs, while competing in an increasingly expensive AI race.

By the numbers: Sales rose across every product line except the iPad, with June quarter records set for iPhone, Mac and Services.

• iPhone: $54.25 billion

• iPad: $6.19 billion

• Mac: $10.35 billion

• Services: $30.74 billion

• Wearables and accessories: $7.88 billion

Revenue rose in every geographic segment, setting June quarter records across all regions.

• Americas: $45.78 billion

• Europe: $29.39 billion

• Japan: $6.55 billion

• Asia Pacific: $8.87 billion

• Greater China: $18.8 billion

What they're saying: Cook said Apple posted its strongest June quarter ever.

• "We were able to achieve this despite supply constraints and sequential foreign exchange headwinds," Cook said on a conference call with analysts.

• Cook said the positive early reviews of the new Siri "underscore our philosophy that building AI that is private and based on personal context can change how users find information and get things done with our products in a way that truly enriches their lives."

Looking forward, Apple said to expect revenue for the current quarter to rise 9% to 11% from the prior year despite a challenging foreign exchange headwind and supply constraints for the iPhone, Mac and iPad that are up significantly from the March-to-June quarter.

• "We continue to expect high levels of demand. However, with less flexibility in supply chain, we expect the impact from the supply constraints to increase significantly sequentially," Cook said.

• Cook said Memory prices continue to rise.

• "We expected to pay significantly more in the June quarter than the March quarter, and that is what happened," Cook said. "For September, we expect to pay even higher memory costs."

Context: Apple shares fell about 4 percent in after-hours trading following the earnings release.

The bottom line: Apple's quarter gives Ternus a strong financial handoff as he prepares to take over next month.

This story is developing.

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Apple posted a solid fiscal third quarter on Thursday, climbing past Wall Street's expectations thanks to strong sales of the iPhone and MacBook computers.

Apple raised the prices of its Macs and iPads last month, citing a memory-chip shortage brought on by the artificial intelligence boom. The company had called the demand spike an "unprecedented challenge" for the consumer electronics industry. While it hasn't yet raised iPhone prices, analysts and consumers expect that to happen later this year.

The maker of the iPhone and iPad said Thursday it earned $29.79 billion, or $2.02 per share, in the April-June period. That is up 27% from $23.43 billion, or $1.57 per share, in the same period a year earlier.

Revenue grew 16% to $$109.42 billion from $94.04 billion.

Analysts, on average, were expecting earnings of $1.89 per share on revenue of $109 billion, according to a poll by FactSet. Tariff refunds of 11 cents per share contributed to the quarter's earnings.

"Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac and Services, and in every geographic segment," said Tim Cook, Apple's CEO. It was Cook's final earnings call. He announced his retirement in April, after 15 years at the helm of the company. John Ternus, Apple's head of hardware engineering, will assume the role on Sept. 1.

"I couldn't be more confident in his leadership, in the executive team and the extraordinary people at Apple," Cook said.

Apple continues to generate cash without the massive artificial intelligence spending that its Big Tech peers area are dealing with "and that showed across most parts of the operation," said Thomas Monteiro, an analyst at Investing.com. "As the market grows more worried about free cash flow trajectories elsewhere in Big Tech, Apple keeps standing out as the safe haven in the storm."

But he cautioned that memory costs — which are continuing to increase — could challenge Apple in the coming quarters. It also won't have the tariff benefit to boost profit margins again. September's iPhone launch and more price increases should "help cushion the hit," Monteiro said.

Shares of Cupertino, California-based Apple, which recently regained its title as the world's most valuable company from Nvidia, fell $7.52, or 2.3%, to $325.91 in after-hours trading.

Apple Inc (NASDAQ:AAPL, XETRA:APC) reported fiscal third-quarter revenue and profit that topped Wall Street expectations, driven by stronger-than-expected iPhone and Mac sales, though shares fell more than 4% in after-hours trading.

The company posted revenue of $109.42 billion, up 16.4% from a year earlier and above analyst estimates of $108.85 billion. Earnings per share came in at $2.02, beating estimates of $1.89 and up 28.7% from the same period last year.

iPhone revenue rose 21.7% to $54.25 billion, ahead of the $53.6 billion analysts had forecast. Mac sales jumped 28.7% to $10.35 billion, well above estimates of $8.62 billion.

Services revenue, however, came in below expectations at $30.74 billion, up 12.1% year-over-year but short of the $31.36 billion analysts had projected. iPad revenue also missed estimates, falling 5.9% to $6.19 billion.

In Greater China, revenue rose 22.4% to $18.82 billion, missing analyst estimates of $19.58 billion.

By geography, the Americas generated $45.78 billion in revenue, up 11.1% and ahead of estimates of $45.42 billion. Europe revenue climbed 22.4% to $29.4 billion, while Japan revenue rose 13.4% to $6.55 billion. Revenue from the rest of Asia Pacific increased 15.6% to $8.87 billion.

Total products revenue, which includes iPhone, Mac, iPad and wearables, rose 18.1% to $78.68 billion, above estimates of $77.25 billion. Wearables, Home and Accessories revenue increased 6.5% to $7.88 billion, roughly in line with estimates.

On profitability, gross margin rose 25.3% to $54.77 billion. Operating expenses climbed 22.9% to $19.08 billion, slightly above estimates of $18.96 billion. Operating income increased 26.6% to $35.7 billion, topping estimates of $33.34 billion, while net income rose 27.1% to $29.79 billion, ahead of the $27.67 billion analysts had expected.