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Apple store on Fifth Avenue in New York City.

ANGELA WEISS/AFP/Getty Images

Apple Inc. on Wednesday posted sales and profits far ahead of Wall Street expectations and announced a US$90-billion share buyback as customers continued to upgrade to 5G iPhones and snapped up new Mac models with Apple’s house-designed processor chips.

Sales to China nearly doubled and results topped analyst targets in every category, led by US$6.5-billion more in iPhone sales than predicted and Mac sales about a third higher than estimates. Apple chief executive Tim Cook said the company sees an economic recovery coming.

“I think the U.S. will be very strong. Certainly, all indications that I see would be very positive on the U.S. economy,” Mr. Cook told Reuters in an interview.

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The results came the midst of a global semiconductor shortage that has hobbled U.S. automotive manufacturers but that appears to have left Apple, a major chip buyer known for its supply chain expertise, unscathed.

“There wasn’t a material issue with our results due to supply,” Mr. Cook told Reuters.

Apple thrived through the coronavirus pandemic as home-bound consumers stocked up on electronic devices and signed up for paid apps and services for fitness and music, and sales shot up even higher as Apple released 5G iPhone models last fall.

For the fiscal second quarter ended March 27, Apple said sales and profits were US$89.6-billion and US$1.40 a share, compared with estimates of US$77.4-billion and 99 US cents a share, according to Refinitiv data.

Apple shares rose 3 per cent in extended trading after the results.

While Apple’s business is booming, its App Store, one of its fastest-growing businesses, has come under increased antitrust scrutiny because of Apple’s in-app payment rules and app review policies. In the coming weeks, Apple will defend a high-profile antitrust lawsuit brought by Fortnite maker Epic Games, while European Union antitrust regulators are set to chare the company after a complaint by music streaming service Spotify, Reuters reported this week.

Macs and iPads – two product categories that Wall Street rarely counted on to supply growth – both benefited from consumers working from home and remote learning. On top of those trends, Mr. Cook said Apple customers were responding strongly to the company’s M1 chip, its first in-house processor for Mac computers.

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“Both of those things happening at once really supercharged the Mac sales. The last three quarters on Mac have been the strongest three quarters ever in the history of the Mac,” Mr. Cook told Reuters.

Apple raised its dividend 7 per cent to 22 US cents a share, a penny ahead of estimates, as well as announcing the US$90-billion share repurchase. Google-owner Alphabet Inc announced a US$50-billion buyback on Tuesday.

Apple said iPhone sales were US$47.9-billion compared with analyst estimates of US$41.4-billion, according to data from FactSet. Sales of Macs and iPads were US$9.1-billion and US$7.8-billion, respectively, compared with FactSet estimates of US$6.8-billion and US$5.6-billion.

Apple investors are looking for growth from Apple’s accessories business, which includes products such as AirPods headphones and its new AirTag trackers, and its services business, which includes its App Store and new offerings such as paid podcasts. Sales in the segments were US$7.8-billion and US$16.9-billion, respectively, versus estimates of US$7.4-billion and US$15.5-billion.

Mr. Cook said the company has 660 million paying subscribers on its platform, an increase from the 620 million in the fiscal first quarter. Apple recently added new paid offerings such as its Fitness+ workout service.

Apple’s sales in the greater China region during the fiscal second quarter, which included the busy Lunar New Year shopping season, were up 87.5 per cent to US$17.7-billion, compared with a 57-per-cent rise in the previous quarter.

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Shares of Apple are up some 93 per cent over the past year, compared with a 61-per-cent rise for the Nasdaq 100 index of which Apple is a component. The array of products and services eased investors’ valuation concerns that Apple relied too heavily on iPhone sales, turning Apple into a US$2-trillion market capitalization company two years after it hit the US$1-trillion mark.

The rise has cooled this year despite Apple reporting its first ever quarter with more than US$100-billion in sales in January, with Apple shares rising only 3.9 per cent since the start of the year compared with a nearly 10-per-cent rise for the Nasdaq 100, as investors have questioned whether Apple shares are too expensive relative to other tech stocks.

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