Apple’s Blockbuster Results Play to a Tough Crowd

That growth can be credited to strength across the company’s product segments with the latest iPhone updates leading the way. Revenue for the smartphone line rose 17% from a year earlier to a record-high $65.5 billion. Service revenue jumped 24%, a notable acceleration from the midteens growth seen in the last several periods. And despite launching new iPhone designs packed with expensive 5G radio chips, Apple’s bottom line exploded. Operating income jumped 31% year over year to $33.5 billion, producing an operating margin above 30% for the first time since late 2015.

A stellar quarter, in other words, especially against the backdrop of a global pandemic that worsened significantly during the quarter. But investors seemed unimpressed: Apple’s share price slipped nearly 3% in after-hours trading following the results and conference call—one in which Apple continued to refrain from giving a forecast for the current quarter, citing continued uncertainty created by the continuing pandemic.

Part of the tepid reaction may be because of dynamics beyond Apple’s control, such as a newfound love among retail investors for beaten down names.

BlackBerry,

the once-mighty smartphone maker that was nearly vanquished by the first iPhones, has seen its share price more than double in the past week. But Apple’s been a hot stock in its own right, with its shares surging 84% over the past 12 months. That has put them at a record-high multiple of around 35 times forward earnings. And the passing of the holiday quarter and iPhone launch naturally brings questions about what Apple might do next—an area the company is always to discuss. So investors just have the most recent quarter to act on, and that blockbuster was already well priced in.

—loath

Write to Dan Gallagher at dan.gallagher@wsj.com