When Apple launched the sixteenth model of its iPhone in September, some tech reviewers described it as an incremental enchancment over earlier fashions.

Apple’s clients didn’t care. They purchased the brand new iPhone 14 in droves.

On Thursday, the world’s most precious firm mentioned that robust demand for iPhones helped it improve complete income by 8 p.c to $90.1 billion for the three months that led to September, bringing an finish to a fiscal yr by which it posted gross sales beneficial properties each quarter. The corporate reported that income rose almost 1 p.c to $20.7 billion.

The corporate mentioned iPhone gross sales elevated 10 p.c to $42.6 billion within the quarter that led to September, a serious deceleration from the 47 p.c improve it reported in the identical interval final yr. The signature product accounts for about half of the corporate’s complete income.

Throughout a name with analysts, Apple mentioned its enterprise was slowing down within the present quarter, with a deceleration in gross sales of Macs and providers. In noting the slowdown, it joined friends like Google, Amazon and Microsoft in warning that their enterprise are being hobbled because the economic system weakens.

Although Apple’s earnings exceeded analysts’ forecasts, its shares initially fell in after-hours buying and selling earlier than turning round and rising greater than 1 p.c to $146.20. The shares had fallen 3 p.c earlier than the market closed.

Tim Cook dinner, Apple’s chief govt, mentioned that the corporate was dealing with inflationary stress on wages and machine parts. These elements, in addition to a strengthening greenback, contributed to cost will increase on gadgets bought internationally.

Some Wall Avenue analysts have pointed to Apple as a protected haven for buyers amid a slowing economic system. In a yr when smartphone gross sales are contracting, the iPhone has expanded and stolen market share. The corporate’s different companies, together with the App Retailer, Apple Watch and AirPods, are additionally rising, although they don’t come near the size of iPhone gross sales.

Different analysts are unconvinced. They see the financial slowdown buffeting the corporate’s two largest markets, the USA and China, and fear that Apple will probably be caught within the downturn. They predict that the iPhone’s enterprise will dim, simply as gross sales of Macs and iPads have cooled as college students and employees return to school rooms and places of work.

“Apple is human,” mentioned Toni Sacconaghi, an analyst with Bernstein Analysis. “Not surprisingly, even this nice shopper model isn’t immune from the financial headwinds.”

A number of years in the past, Apple unveiled a brand new technique to offset slowing iPhone gross sales by accelerating the sale of software program and providers throughout its gadgets. It issued its personal bank card and rolled out a collection of recent subscription choices, together with Apple TV+ and Apple Information+.

The providers enterprise posted its lowest ever quarterly gross sales improve this quarter, rising 5 p.c to $19.19 billion. The corporate seems to be intent to keep away from an analogous slowdown within the present interval. This week, it raised the month-to-month costs on Apple Music by $1 and Apple TV+ by $2. It additionally mentioned it might start taking a 30 p.c minimize of promoting funds to spice up social media posts and begin levying a 30 p.c charge on trades of nonfungible tokens throughout iPhones and iPads.

“To do this now, in a difficult economic system, it reveals that their enterprise is powerful,” mentioned Journey Miller, founding father of Gullane Capital Companions, an funding agency based mostly in Memphis, Tenn.

Nonetheless, the most important challenge Apple faces is its provide chain. China produces greater than 90 p.c of the iPhones that it sells globally, in addition to a lot of its iPads and Macs. The nation’s strict coronavirus restrictions have led it to shut factories to suppress outbreaks, costing Apple about $4 billion in misplaced iPad and Mac gross sales. These troubles unfold to an iPhone manufacturing facility for the primary time this week when Foxconn reported a Covid outbreak at its Apple meeting plant in Zhengzhou, China.

Apple is also navigating growing geopolitical tensions between the USA and China. Beijing’s navy provocations have impressed Washington to scrutinize the availability chain dangers ought to China invade Taiwan. The White Home not too long ago imposed new restrictions on the sale of U.S. expertise to Chinese language chip makers, and China’s President Xi Jinping final week urged his nation to be ready for “harmful storms.”