Investing.com - Apple reported first-quarter results Thursday that topped Wall Street analysts as stronger services revenue offset weaker iPhone sales at a time when competition from smartphone rivals in China persists.

Apple's earnings call is today at 5 pm ET. AAPL stock heads into the report down 4% YTD. Analysts are focused on services and China sales.

In a rare move, analysts at Jefferies downgraded one of the largest companies in the world, Apple ( AAPL -0.39%), to underperform. Wall Street analysts are known for being bullish, so underperform and sell ratings tend to make up only a small percentage of overall analyst ratings.

Apple's much-anticipated sales in Greater China fell to $18.5 billion, down 11% from $20.8 billion in the year-ago fiscal first quarter. That was also below Wall Street's estimates. According to FactSet,

Chinese startup DeepSeek has debuted an AI app that challenges OpenAI's ChatGPT and other U.S. rivals, sending a shock through Wall Street.

A tech sell-off on Monday saw more than $1 trillion in value erased over concerns over China's DeepSeek AI app.

Apple is playing catch-up with its biggest tech peers in AI. A staggered rollout of Apple Intelligence also has meant that consumers have had to wait for many features. And competitors have jumped out ahead in other areas, such as smart glasses. Apple’s wearables business declined over the holidays as well.

As services become a bigger part of Apple’s business, the company continues to deliver higher profit margins for investors.

The company has heavily advertised AI features since the latest iPhones were released in September.

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China just threw a curveball into the tough Artificial Intelligence (AI) race as DeepSeek’s chatbot app just skyrocketed to the number 1 spot on both the