Apple reports biggest revenue growth since December 2021

• Sales of the iPhone grew 13% year-over-year and overall revenue grew 10% — Apple's largest quarterly revenue growth since December 2021.
• Apple CEO Tim Cook said that Apple would “significantly grow” its AI investments, adding that the company is “open to M&A that accelerates our roadmap.”
• The company also saw success in China during the quarter, with sales rising 4% on an annual basis to $15.37 billion. Cook said a Chinese subsidy for some devices helped Apple in the region.

Apple reported third-quarter earnings on Thursday that topped Wall Street expectations for profit and revenue.

iPhone sales grew 13% year-over-year and overall revenue grew 10% — Apple's largest quarterly revenue growth since December 2021.

Apple shares were up about 2% in after-hours trading on Thursday.

Here's how Apple did versus consensus estimates for the quarter ending June 28:

• Earnings per share: $1.57 vs. $1.43 expected
• Revenue: $94.04 billion vs. $89.53 billion expected

• iPhone revenue: $44.58 billion vs. $40.22 billion expected
• Mac revenue: $8.05 billion vs. $7.26 billion expected
• iPad revenue: $6.58 billion vs. $7.24 billion expected
• Other Products revenue: $7.40 billion vs. $7.82 billion expected
• Services revenue: $27.42 billion vs. $26.80 billion expected
• Gross margin: 46.5% vs. 45.9% expected

The company usually provides informal guidance about how it sees the current quarter shaping up on a call with analysts. Apple will also likely provide information about how it's grappling with the Trump administration's tariffs. Apple said in May that it would incur $900 million in tariff costs in the June quarter.

Apple reported $1.57 in earnings per share or $24.43 billion of net income during the quarter, versus $1.40 per share or $21.45 billion in the year-ago period.

“It was an exceptional quarter by any measure,” Apple CEO Tim Cook told CNBC's Steve Kovach.

Cook said that about 1 of the company's 10 percentage points of revenue growth could be attributed to customers buying more products to get ahead of potential tariffs.

The company's most important business remains the iPhone, which saw 13% growth on an annual basis during the quarter to $44.58 billion in sales.

Cook said that iPhone revenue was strong because the iPhone 16 is more popular compared to the iPhone 15 devices on sale last year at the same time. Cook said iPhone 16 sales were up “strong double digits” versus its predecessor. Cook specifically highlighted popularity among current iPhone users upgrading to a new one.

Apple's Mac business grew the fastest of any of Apple's units during the June quarter, growing nearly 15% to $8.05 billion in revenue. Apple released updated MacBook Air laptops, its best-selling Mac, just before the quarter started.

The company's services business, which includes the company's warranties, content subscriptions, licensing deals with Google, and iCloud continued to grow to $27.42 billion in the period, a 13% increase. Cook highlighted growth in the company's iCloud subscriptions and said App Store revenue grew “double digits” during the quarter.

The two tougher spots in Apple's report were iPad sales and the company's other products division, which it sometimes calls its wearables. It consists of Apple Watch, AirPods, and other accessories. Revenue for iPad was down 8% to $6.58 billion, despite the company launching a low-cost iPad in March. Apple's wearables unit declined 8.64% to $7.4 billion during the quarter.

Apple also saw success in China during the quarter, with sales rising 4% on an annual basis to $15.37 billion. Apple reports its sales from China, Hong Kong and Taiwan in the same unit. It's a reversal from the past two quarters, where Apple's China sales declined 2% in Apple's second fiscal quarter and 11% in the first quarter.

Cook said a Chinese subsidy for some devices helped Apple in the region.

“The subsidy does apply to some of our products, and it clearly helps,” Cook said.

'Significantly growing' AI investments

In June, Apple held its annual Worldwide Developers Conference, or WWDC, where it unveiled new software for iPhones, Macs and other devices, but the company's artificial intelligence announcements at the event underwhelmed investors.

Cook on Thursday said that Apple views AI as “one of the most profound technologies of our lifetime.”

“We are significantly growing our investments,” Cook said about AI. “We're embedding it across our devices, across our platforms and across the company.”

Cook said that Apple had acquired “around” seven companies so far this year although none had been “huge in terms of dollar amount.”

“We're open to M&A that accelerates our roadmap,” Cook said.