The California-based U.S. tech giant has weathered the global smartphone recession better than many of its rivals, but faces an uneven economic recovery in China due to the trade war between Washington and Beijing, Apple's key market.

Apple said sales for the fourth fiscal quarter ended Sept. 30 fell about one percent to $89.5 billion, more than Wall Street expected at $89.28 billion, according to LSEG data.

Net income rose about 11 percent to about $22.96 billion, versus $20.72 billion compared to the same period last year, and earnings per share were $1.46 versus expectations of $1.39, according to LSEG.

But the results don't include the bulk of sales of the latest iPhone models.

As for Apple's entire fiscal year, it recorded sales of $383.29 billion, down about 3 percent from fiscal year 2022. Quarterly revenue fell less than 1 percent in the September quarter.

Apple faces tougher competition in the smartphone market this year as Huawei Technologies returns to the field with new Chinese-made chip phones after remaining almost closed in the market for several years due to trade restrictions imposed by the U.S. government.

Apple's sales in China fell 2.5 percent to $15.08 billion from $15.47 billion in the fourth quarter of last year.

Apple CEO Tim Cook said that after calculating foreign exchange rates, Apple's business in China grew year-on-year, driven by revenue from iPhone sales and services.

"In mainland China, we set a quarterly record for the September quarter for the iPhone," Cook told Reuters. We had four of the top five best-selling urban smartphones in China."

Cook also said that two of Apple's new phone models — the iPhone 15 Pro and Pro Max — face supply constraints, adding: "We're working hard to manufacture more of them. We believe that later this quarter, we will reach a balance between supply and demand."

Many global winds are also playing in Apple's favor, as the smartphone market is expected to begin to recover in 2024 after reaching its lowest levels.

The PC market is also expected to see better performance next year. Earlier this week, Apple introduced the new Macs with ultra-fast chips.

In the long run, investors are looking forward to how Apple responds to a boom in artificial intelligence in which systems can pursue claims in human-like ways — an area that has attracted billions of dollars in spending by Alphabet's Microsoft and Google.

Apple said it was working on the technology and saw it as a way to improve a wide range of products.

For now, the iPhone remains Apple's biggest source of sales. Sales of the device came in at $43.81 billion in the fourth quarter, in line with analysts' expectations of $43.81 billion, according to LSEG data.

Sales in Apple's wearables segment, which includes the Apple Watch and AirPods, fell 3 percent to $9.32 billion, below expectations of $9.43 billion, according to LSEG data.

Apple suffered for several quarters from falling Mac and iPad sales, and that decline continued through the fourth quarter of its fiscal year, with Mac sales falling by a third to $7.61 billion, and iPad sales down 10 percent to $6.44 billion, compared to expectations of $8.63 billion and $6.07 billion, respectively, according to LSEG data.

Sales in Apple's services sector, which includes Apple TV+ and recently struck a deal with soccer star Lionel Messi, rose 16 percent to $22.31 billion, compared with expectations of $21.35 billion.

Apple's most prominent quarterly sales:

  • iPhone revenue: $43.81 billion, vs. $43.81 billion expected
  • Mac revenue: $7.61 billion vs. $8.63 billion expected
  • iPad revenue: $6.44 billion vs. $6.07 billion expected
  • Wearable revenue: $9.32 billion, vs. $9.43 billion expected
  • Services revenue: $22.31 billion, vs. $21.35 billion expected
  • Gross profit margin: 45.2 percent vs. 44.5 percent forecast