Apple's Q3 earnings report beats the street's estimates on revenue and earnings per share.

Apple Inc. (AAPL) reported fiscal third-quarter earnings on Thursday, beating Wall Street estimates with $83 billion in revenue, confirming robust iPhone demand and pointing to record services revenue while admitting it couldn't build enough Macs or iPads to meet demand.

Apple's stock increased more than 2.6% to around 162. In Thursday's regular session, Apple shares rose 0.4 percent to settle at 157.35.

Wall Street had been prepared for a disappointing report from Apple, given the industrywide decline in personal computer and smartphone sales.

Apple reported adjusted earnings per share of $1.20 in the third quarter, above analyst estimates of $1.16.

Apple's entire revenue in the third quarter of 2022 was $83 billion, which is also above analysts' estimates of $82.81 billion, with revenue increasing by 2% year on year. Apple's revenue increased by 2% during the quarter, compared to 36% growth in the same period last year and more than 8% growth in the March quarter. Cook stated that the results were better than expected, while CFO Luca Maestri stated that the operating climate was "difficult."

Apple did not issue formal quarterly guidance. Analysts predicted that the company would report fourth-quarter profits per share of $1.31 and sales of roughly $90 billion.

"Despite the adverse operating climate, our June quarter results demonstrated our ability to run our business successfully." Apple CFO Luca Maestri stated in a statement, "We established a June quarter sales record, and our installed base of active devices hit an all-time high in every geographic group and product category."

Apple's iPhone sales increased 3% to $40.67 billion, exceeding Wall Street's expectation of $38.9 billion. Smartphones accounted for 49 percent of the company's total sales.

Apple's iPhone sales were above Wall Street projections, indicating that demand for iPhone 13 models remains robust even as the device enters the second part of its annual release cycle. Apple usually launches new iPhones in September, and sales plummet as people wait for new models.

"We had a record number of switchers and had double-digit growth for consumers new to the iPhone," Cook added.

In the fiscal third quarter, Apple's services revenue increased 12 percent to $19.6 billion. The App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade, and more services are available. Services revenue increased from $17.5 billion in Q3 last year to $19.6 billion in Q3.

During the quarter, Apple's services division grew at the fastest rate. It includes monthly subscriptions, payment fees, warranties, Google search licence fees, and iPhone App Store earnings. Apple now has 860 million paid subscribers, which includes everyone who subscribes to an app offered on the Apple App Store as well as items such as Apple Music and iCloud.

Apple's Mac computer sales fell 10% to $7.38 billion. In addition, iPad tablet sales fell 2% to $7.22 billion.

Mac sales fell short of consensus projections and plummeted more than 10% year-on-year. Cook attributed this to supply restrictions and a strong currency.

Apple's iPad fell 2% year on year but topped moderate Wall Street predictions of $6.9 billion, as experts predicted that Apple would move away from iPad tablets in the face of a processor shortage. According to Cook, the iPad's drop was also influenced by supply restrictions and a strong currency.

Apple's other goods category, which includes AirPods, Apple Watches, HomePod speakers, and accessories divisions, fell more than 8% year on year to $8.08 billion, falling short of Wall Street estimates.

Apple's gross margin topped the company's own April prediction. Apple's gross margin was 43.26 percent, higher than Wall Street's prediction of 42.61 percent. Apple spent more than $28 billion on share buybacks and dividends during the quarter.

Apple is largely expected to release the iPhone 14 and Apple Watch Series 8 later this fall. While this won't have much of an influence on the company's Q4 profitability because the goods were introduced only a few weeks before the end of the quarter, it should improve its Q1 2023 results.

However, Morgan Stanley believes that this is only a short-term problem for Apple. According to Erik W. Woodring in a note, Apple's services division might help bring the tech titan's market worth back beyond $3 trillion.

Apple is planning to join the AR/VR industry with its own headgear, which will most likely be available in 2023. This might be the company's next significant product, opening up new prospects for service and content sales.