Apple Inc. on Tuesday reported fiscal second-quarter results that comfortably topped Wall Street expectations on the strength of its services business and a record contribution from its India manufacturing footprint, even as iPhone revenue in Greater China declined for a sixth consecutive quarter and the company’s hardware unit growth slowed to its weakest pace in nearly two years.

The Cupertino-based company posted revenue of $97.4 billion for the quarter ended March 28, up 4.1% from a year earlier and ahead of the $95.6 billion consensus compiled by FactSet. Earnings per share came in at $1.74, against estimates of $1.66. Services revenue rose 14.2% to $27.9 billion, a record, while iPhone revenue grew 1.6% to $51.3 billion. Greater China revenue fell 7.8% to $14.6 billion, a steeper drop than the 5.1% analysts had penciled in.

Shares of Apple climbed 3.4% in after-hours trading in New York, extending a recovery that has lifted the stock more than 11% since the Iran ceasefire took effect on April 15 and erasing most of the underperformance the company had logged against the rest of the so-called Magnificent Seven during the war window.

The results landed as Chief Executive Tim Cook used a roughly 12-minute opening to deliver what analysts described as Apple’s first detailed defense of its hybrid artificial-intelligence strategy, against a backdrop in which the largest U.S. cloud providers have spent the past five days announcing capital-spending plans that dwarf Apple’s own. Microsoft, Alphabet and Meta Platforms collectively guided to more than $215 billion in 2026 data-center capex last week.

“Our approach is different by design, and it is a strength, not an apology,” Cook told analysts on the call. He said roughly 78% of Apple Intelligence requests on the latest generation of iPhones were now being served entirely on-device, with the remainder routed to Private Cloud Compute, the company’s confidential-execution data-center service. The on-device share, he added, had climbed from about 61% at the end of December as new models replaced older ones in the active install base.

“What we heard tonight is Apple, finally, leaning into the architecture,” said Priya Nadkarni, head of U.S. technology research at Hartwell Capital. “For the better part of a year the question on every call was whether they were behind. The pitch now is that being behind on hyperscale capex is the point, because their compute is in the customer’s pocket and on the customer’s electricity bill.”

Apple disclosed that capital spending in the quarter was $4.2 billion, up 38% from a year earlier but a fraction of what the largest cloud providers are running per quarter. Chief Financial Officer Luca Maestri said the company expected full-year capex to come in “in the high-teen billions,” with the bulk weighted toward Private Cloud Compute, custom silicon design and a previously announced $1 billion expansion of its Austin engineering and operations campus.

The India story, which Cook said would become a recurring feature of the company’s disclosures, was the report’s other surprise. Apple said roughly 28% of all iPhones sold globally in the quarter had been manufactured in India, up from 19% a year earlier and 24% in the December quarter. The shift, accelerated by tariff uncertainty during last year’s trade tightening and by component-supply diversification triggered by the Iran war’s shipping disruptions, made India the company’s second-largest production hub by units for the first time. Cook said Apple now expects India to account for “roughly a third” of global iPhone output by the end of calendar 2026.

The geographic rebalancing has not extended to demand. Greater China iPhone unit sales fell an estimated 11% in the quarter on Counterpoint Research’s tracking, with the company ceding share both to Huawei in the premium tier and to a resurgent Xiaomi in the upper-mid range. Cook attributed roughly two percentage points of the decline to currency and the remainder to “competitive intensity” in the Chinese premium segment, language he has used on each of the past three calls.

A handful of analysts pushed Maestri on whether the China softness should temper the company’s confidence in its second-half outlook. He pointed to an installed base “approaching 2.3 billion active devices,” the highest in the company’s history, and a services attach rate that had widened in every reportable geography. “We do not need any single market to inflect for our model to compound,” Maestri said. He guided fiscal third-quarter revenue to a range that, at the midpoint, would represent 5% to 6% growth, ahead of the Street’s 3.8% estimate.

The AI section of the call drew the most analyst attention. Apple announced that the next major iOS release, set to be previewed at the company’s Worldwide Developers Conference in early June, would extend the on-device Apple Intelligence framework to a new “private agent” capability — allowing the iPhone to take multi-step actions across third-party apps without routing data to the cloud. Cook said the feature had been “fully co-designed” with the company’s silicon and privacy teams, and that it would require the latest two generations of A-series chips. Citi’s Jim Suva called it “the first feature in this AI cycle for which Apple’s installed-base story is the moat, not the obstacle.”

Apple also disclosed that it had reached a long-term licensing arrangement with at least one large-model developer to fine-tune a version of that company’s frontier model to run on Apple silicon for use through Private Cloud Compute. Cook declined to name the partner. People familiar with the talks identified it as Anthropic, which has been negotiating a non-exclusive licensing structure with multiple device makers over the past three months. An Anthropic spokesperson declined to comment.

The call closed with the company’s quarterly capital-return announcement. Apple’s board authorized an additional $110 billion in share repurchases and lifted the dividend by 5% to $0.27 per share. The buyback expansion was slightly smaller than the $115 billion analysts had projected.

Maestri said the company would provide an update on the India production ramp and on Apple Intelligence adoption metrics at the developer conference. Cook, asked in the call’s final question whether the post-war environment had changed the company’s planning assumptions, said only that Apple’s supply organization had “spent the last 90 days proving that what we built over the last five years works.” He added that further detail on the AI roadmap and on new manufacturing commitments would be shared in early June.