Apple Inc. has reported a decline in iPhone sales across nearly all global markets, excluding Europe, in the latest quarterly results released by the tech behemoth. The company revealed that demand for its flagship smartphones decreased by over 10% in the first quarter of the year, contributing to a 4% drop in overall revenues to US$90.8 billion. Despite the downturn, Apple’s shares surged in after-hours trading, buoyed by results that surpassed some analysts’ expectations.

The company attributed the sales dip to disruptions in the supply chain caused by the ongoing COVID-19 pandemic, which had led to unusually robust sales during the same period last year. However, Apple expressed optimism about a potential rebound in sales, citing upcoming product launches and investments in artificial intelligence (AI).

In Greater China, a critical market for Apple, iPhone sales experienced an 8% decline. CEO Tim Cook sought to allay investor concerns, highlighting that sales in mainland China had actually increased. Despite facing stiff competition from local rivals like Huawei, analysts noted that the iPhone maintained an edge in terms of features, functionality, and prestige.

Analysts pointed out that Apple has faced challenges in driving significant upgrades since the introduction of the iPhone 12 nearly four years ago. The company is pinning hopes on the upcoming iPhone 16, slated for release later this year, which is expected to introduce new AI features to stimulate demand.

Additionally, Apple is grappling with legal battles, including antitrust scrutiny over its app store fees in the US and Europe. A separate lawsuit against Google in the US threatens Apple’s lucrative payments received for making Google the default search engine on its Safari browser.

Despite these challenges, Apple announced plans to allocate US$110 billion to share buybacks, signalling confidence in its financial position. CFO Luca Maestri projected a “low single digits” increase in sales for the next quarter, with double-digit growth expected in the services segment.

Looking ahead, analysts remain cautiously optimistic, citing resilience in the Chinese market and anticipation for upcoming catalysts that could bolster investor sentiment.