Apple shares rose 6% after results beat estimates and the company revealed a $110 billion buyback.

Apple (AAPL) shares rose as much as 6% early Friday after the tech giant reported earnings that beat expectations, sales fell less than expected and announced a new $110 billion stock buyback plan.

The iPhone maker late Thursday reported second-quarter earnings per share (EPS) of $1.53 on revenue of $90.8 billion. Wall Street had expected earnings per share of $1.50 on revenue of $90.3 billion, according to analyst estimates compiled by Bloomberg.

Apple's revenue in Greater China, which includes mainland China, Taiwan, Singapore and Hong Kong, fell 8% year-on-year to $16.37 billion. However, that was better than the $15.87 billion analysts expected. Apple CFO Luca Maestri told Yahoo Finance's Josh Lipton that the company saw growth in mainland China during the quarter.

The company's significant iPhone revenue totaled $45.96 billion, down from $51.33 billion in the second quarter of last year. Apple also announced that it authorized an additional $110 billion in stock buybacks and increased its dividend to $0.25 per share. Shareholder return plans have become a feature of big tech company results this year, with Meta starting to pay a dividend in February, and Alphabet announcing its own plans to start paying a dividend late last month.

Before Thursday's report, Apple stock had fallen 10% this year, lagging many of its Big Tech peers and the broader market.

In the fiscal second quarter, Mac revenue was $7.45 billion versus $6.79 billion expected, while iPad revenue was $5.55 billion. Analysts had expected $5.91 billion. Wearable devices, which include AirPods, Apple Watch and Vision Pro, saw revenues of $7.91 billion. Wall Street was looking for $8.28 billion.

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Another bright spot for Apple this quarter: Services revenue was $23.87 billion, compared to $20.91 billion last year, an all-time record. Analysts had expected $23.28 billion.

On its earnings call, Apple also said it expects current quarter revenue growth to be in the low single digits. Services revenues are expected to grow by double digits at a rate similar to what the company witnessed in the first half of its fiscal year.

JPMorgan analysts led by Samik Chatterjee wrote in a client note late Thursday that these results “position a strong launching pad for the company regarding results in FY24 as the focus shifts to the impending AI smartphone upgrade cycle in the coming years.” Following the results, JPMorgan maintained an overweight rating on the stock and raised its price target to $225 per share from $210.

Apple is also gearing up for the Worldwide Developers Conference (WWDC) in June, where it will unveil the latest versions of iOS, macOS, watchOS, iPadOS, and VisionOS. Probably one of the biggest announcements at the show will be how Apple will integrate generative AI into its various products.

At the company's earnings conference call, CEO Tim Cook said: “We believe we have advantages that will differentiate us in this new era.”

In a note to clients after the report, Evercore ISI analysts led by Amit Dharyanani wrote: “We believe a range of positive catalysts should help push the stock higher as we head into WWDC where AAPL will provide details on its AI strategy across both devices and we believe… Apple can deliver the upside of AI without the AI ​​capital expenditures we see elsewhere.” Evercore maintained its Outperform rating and $220 price target on the stock.

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Apple may be a relative latecomer to the generative AI party, with competitors across major tech companies already rolling out their own product offerings to consumers and enterprise customers. However, the company has been busy buying up AI companies and building its own large language model to support its AI efforts.

Maestri told Yahoo Finance that the company is making significant investments in generative AI technologies. Apple is also looking to work with OpenAI, Google and others to elevate its AI offerings. According to Mark Gurman of Bloomberg.

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Email Daniel Hawley at [email protected]. Follow him on Twitter at @Daniel Holly.

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