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Apple posted blockbuster quarterly earnings on Thursday but could not shake investor fears that the iPhone maker will suffer from US President Donald Trump’s trade war and is slipping behind in the AI race.

Shares rose just 2 per cent in after-hours trading, staying below their highs of this week, despite the company posting much better than expected 10 per cent year-on-year growth in revenue for the quarter to the end of June and an upbeat forecast.

“Investors are just shrugging off the good news, and I think it speaks to the wall of uncertainty for the Apple investor today,” said Gene Munster, managing partner at Deepwater Asset Management. “It’s basically become a ‘show me’ story.”

Apple has been heavily hit by Trump’s trade and tariff agenda since his “liberation day” announcements in April, which wiped about $700bn off its market capitalisation.

Worries that the company is falling behind rivals in the race to develop artificial intelligence have also gripped investors in recent months, and looming legal and regulatory decisions pose a longer-term threat to its services business.

Apple shares were down 17 per cent since the start of the year before the earnings report, marking it out from Big Tech peers such as Nvidia, Microsoft and Meta, who have made substantial gains.

The company expects about $1.1bn in tariff-related costs in the quarter to September, assuming the current tariff rates do not change, chief executive Tim Cook said.

Just hours after Apple released its earnings on Thursday, Trump reimposed tariffs on imports from critical partners, including India. Cook earlier confirmed the “majority” of iPhones sold in the US now originated from India.

While the $1.1bn tariff impact is “chump change” for the $3tn tech giant, Munster said the extra cost “psychologically . . . just needles the investors with their greatest fears: that it’s going to slow growth”.

Cook faced a barrage of questions on Thursday’s earnings call with analysts, focused on its delayed AI efforts and how tariffs would impact its sprawling global supply chain and crucial device sales.

Global iPhone sales were up 13.5 per cent year on year in the quarter to June at $44.6bn.

Chief financial officer Kevan Parekh said there had been “some evidence” that sales were boosted by customers placing orders to get ahead of US tariffs early in the quarter.

He estimated the tariff-related boost from early shopping was worth “about a point of the 10 points of year-on-year growth”.

Munster said the revenue boost for the quarter could also be partly attributed to a growing pool of customers due for an upgrade to their ageing devices.

Apple said its gross margin, which is being closely watched for signs of tariff costs weighing on profitability, was 46.5 per cent in the quarter — better than estimates of 46 per cent.

It expects “mid to high single-digit growth” for the current quarter, with gross margin remaining stable at between 46 per cent and 47 per cent.

In China, Apple’s sales have suffered from competition from local handset makers such as Huawei and Xiaomi. However, revenue from China increased 4 per cent in the quarter from a year ago, hitting $15.4bn and bucking a trend of quarterly declines.

Cook told analyst the growth in China had been driven by the iPhone, with some of Apple’s products benefiting from a new government subsidy programme for smartphones.

Services revenue, which includes the App Store, iCloud and Apple Pay, was $27.4bn, up about 13 per cent year on year, continuing its double-digit growth.

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Earnings per share were $1.57, compared with consensus estimates of $1.43, while net income was also up at $23.4bn, compared with the $21.4bn expected.

Cook said Apple was growing its AI investments. “We did during the June quarter, we will again in the September quarter,” he told analysts, without giving specific numbers.

The company, he added, was reallocating “a fair number of people to refocus on AI features . . . we are putting all of our energy behind it”.

Apple spent $8.8bn on research and development in the three months to June, about $800mn more than the prior year.

Cook said he was also open to buying companies that would boost Apple’s AI efforts. “We are very open to M&A that accelerates our road map [and] we are not stuck on a certain size company.”