Apple just reported Q4 results. Here’s why the stock is falling.

Apple (NASDAQ:AAPL) shares fell 2% in extended trading on Thursday after the tech giant reported fiscal fourth-quarter results that topped estimates.

For the period ending September 28, Apple said it earned an adjusted $1.64 per share (or $0.97 on a GAAP basis) as revenue rose 6.1% year-over-year to $94.93B. Included in that was $46.22B from the iPhone, $6.95B from the iPad and $24.97B from its all-important Services division, below the $25.27B analysts were expecting.

The $1.64 per share figure excludes the one-time charge recognized in the quarter related to the impact of the reversal of the European General Court’s State Aid decision.

Revenue attributed to the Mac and its Wearables, Home and Accessories segments came in at $7.74B and $9.04B, respectively.

Also of note was the company’s performance in China, where it generated $15.03B in revenue for the quarter, below the $15.8B estimate. The company is facing steep competition in the market, particularly from Huawei.

Gross margins, a closely watched metric, came in at 46.2%, slightly above the 46.1% estimate.

Analysts had expected the company to earn an adjusted $1.60 per share on $94.52B in revenue.

“Today Apple (AAPL) is reporting a new September quarter revenue record of $94.9 billion, up 6 percent from a year ago,” said Tim Cook, Apple’s CEO. “During the quarter, we were excited to announce our best products yet, with the all-new iPhone 16 lineup, Apple Watch Series 10, AirPods 4, and remarkable features for hearing health and sleep apnea detection. And this week, we released our first set of features for Apple Intelligence, which sets a new standard for privacy in AI and supercharges our lineup heading into the holiday season.”

Ahan Vashi, Investing Group Leader for The Quantamental Investor, said the results do not indicate any Apple Intelligence-related bump. “Given its elevated trading multiples [~35-36x P/E], Apple’s minuscule top and bottom line beats provide little solace,” Vashi wrote in an email. “I continue to view AAPL stock as dead money until hard evidence of an AI-supercycle is found.”

Conversely, Evercore ISI analyst Amit Daryanani said the results were “modestly ahead of expectations,” with China and gross margins coming in ahead of buyside expectations.

Apple will hold a conference call at 5 p.m. EST to discuss the results.

(This story has been updated to include analyst commentary.)