Apple Inc. shares jumped in late trading after the company posted stronger-than-expected sales last quarter and predicted a return to growth in the current period, sparking optimism that a slowdown is easing. 

Revenue fell 4.3 per cent to US$90.8 billion in the fiscal second quarter, which ended March 30, the company said in a statement Thursday. That compared with an average analyst estimate of $90.3 billion. Profit in the quarter also topped Wall Street projections.

In the current period, Apple expects revenue to climb by a percentage in the low single digits, Chief Financial Officer Luca Maestri told Bloomberg Television’s Emily Chang.

The results came as a relief to investors, who have been waiting for the iPhone maker to pull out of a long slump. Apple has posted sales declines in five of the past six quarters, hurt by a sluggish smartphone market and headwinds in China. The company warned analysts in February that revenue in the latest period would be down about 5 per cent from a year earlier. 

The shares gained more than 7 per cent in extended trading after the report was released. Apple had been down 10 per cent to $173.03 this year through Thursday’s close.

Earnings amounted to $1.53 a share in the second quarter, exceeding the $1.50 analysts had estimated. Apple increased its dividend 4 per cent to 25 cents a share, in line with expectations. And the board approved plans to buy back an additional $110 billion of the company’s stock.

A lack of innovative new devices has contributed to slow sales at Apple, but the company looks to begin rectifying that on May 7. That’s when it plans to unveil new iPads — the first updates to its tablet line in 1 1/2 years.

The Cupertino, California-based company also is planning a long-awaited push into generative artificial intelligence. In June, Chief Executive Officer Tim Cook is expected to lay out Apple’s AI strategy at its annual Worldwide Developers Conference. 

“We are making significant investments in the space,” Apple’s Maestri said Thursday. “We believe we are well-positioned.”

Apple’s slowdown in China has been of particular concern to investors in recent months. Consumers there are flocking to homegrown smartphone brands, and the government has banned the use of foreign technology in some offices.

The company generated $16.4 billion in revenue from greater China last quarter. Though that number was down from a year earlier, it handily beat the $15.9 billion analysts had predicted. 

Apple doesn’t break down sales of individual product lines by region, but analysts have pointed to the iPhone as a weak spot in China. Counterpoint Research estimated that sales of the device nosedived 19 per cent in China, the product’s worst quarter since 2020.

That’s fueled a broader decline in iPhone demand. Total shipments of the device fell nearly 10 per cent in the March quarter, according to IDC, marking the steepest drop since Covid lockdowns snarled supply chains in 2022.

Maestri said that the China concerns were overblown. “We were happy with our results in China,” he said. “The reality is different from maybe what you read at times.”

At the same time, Apple hasn’t shown that new product categories can reinvigorate growth. It canceled work on a self-driving car in February, eliminating a project that some had hoped could become one of its famous “next big things.” 

The company did push into the mixed-reality headset market this year, with the Feb. 2 debut of the Vision Pro. But that product is off to a slow start and could take years before it adds meaningfully to Apple’s revenue. 

The company’s biggest moneymaker remains the iPhone, which accounts for about half of sales. The product generated $46 billion in the second quarter, topping estimates of $45.8 billion. That was a sharp decline from the $51.3 billion Apple reported in the year-ago quarter — despite the fact that the latest model was considered to be a substantial upgrade.

Apple is planning to upgrade the iPhone this year with slightly bigger screens and new chips focused on AI. The Pro models also will add a new button for capturing photo and video, but they’ll otherwise look the same as current versions.

The iPad business continued its decline last quarter, with revenue coming in at $5.56 billion. That missed the average analyst estimate of $5.91 billion. For the first time in the product’s history, Apple went an entire calendar year without upgrading the iPad’s hardware. The device may fare better in the current quarter, with pent-up demand helping fuel sales of the models set to be unveiled next week. 

The Mac generated $7.45 billion in sales, beating the $6.79 billion projection. The business got a boost from the new MacBook Air, which was updated in March with an M3 chip. Apple is planning to release its first Macs with M4 processors later this year, adding a fresh focus on AI capabilities, Bloomberg News has reported.

Apple’s Wearables, Home and Accessories segment brought in $7.91 billion revenue. That compares with estimates of $8.29 billion and represents a nearly 10 per cent decline from the year-ago quarter. The latest Apple Watch models were only minor upgrades, and the company hasn’t resolved litigation surrounding a disabled feature for calculating blood-oxygen saturation.

Services were a relative bright spot, coming in at $23.9 billion in revenue. That topped Wall Street expectations of $23.3 billion. The category includes Apple Music, the TV+ streaming platform and iCloud subscriptions, but its revenue primarily comes from the App Store.

That business is under pressure from regulators, with Apple being forced to allow third-party marketplaces and payment services in the European Union. Depending on how Apple fares in a legal battle with the Justice Department, it may have to make changes in the U.S. as well.