The gloomy market reaction overshadowed an otherwise strong financial performance in Apple's first fiscal quarter.

In the three months to 30 December, the tech giant reported sales of $120bn (£94bn) and profit per share of $2.18 (£1.71) - comfortably beating targets set by analysts.

However, Apple's chief financial officer has warned that revenue in this current quarter will be at least £5bn (£3.9bn) less than the same period a year ago.

Sales of iPhones in China - a key market - are in sharp focus, as they were $3bn (£2.35bn) less than what analysts had anticipated.

The latest results will fuel concerns that Apple is losing ground here, with consumers switching to foldable smartphones and devices made by local rival Huawei.

In an interview with Reuters, Apple CEO Tim Cook admitted that China is the most competitive smartphone market in the world.

IDC analyst Nabila Popal said: "In China, Apple is facing more competitive challenges not only because of Huawei but also because of foldables, which is a very popular and fast-growing segment in China - and as we all know, Apple does not have a foldable device - yet."

iPhone sales soar elsewhere

Overall, iPhone sales hit $69.7bn (£54.5bn) in the last quarter - growth of 6% - thanks to the strength of its latest smartphone line-up.

Mr Cook reported "strong double-digit growth in emerging markets outside of China".

The iPhone 15 range includes devices that can capture 3D video, complementing its new Vision Pro headset, which hits the US market today.

During a conference call, the CEO described generative artificial intelligence as a "huge opportunity" - and while there is a "lot of work going on internally" to explore this technology, the company has nothing further to say until later in the year.

Apple's biggest growth area was in services - including Apple TV+, Apple Music, iCloud storage and the App Store - with sales rising 11% to $23.1bn (£18.1bn).

But there could be clouds on the horizon in Europe because new laws will allow developers to post their iPhone software on rival app stores, potentially starving Apple of revenue.