Apple shares fell 9.56% in Friday afternoon trading, dropping $31.88 to $301.55, despite the company reporting a record fiscal third-quarter 2026 performance, as investors focused instead on weaker-than-expected results from Apple’s Services division and its China business.

The decline came just days after Apple had briefly reached a $5 trillion market capitalization for the first time and reclaimed the title of world’s most valuable publicly traded company from Nvidia. Rick Rodda, an analyst quoted by TheStreet, framed the market’s disappointment against that backdrop of elevated expectations. “Its stock was sitting just below record highs going into earnings, having cleared the $5 trillion valuation hurdle again and reclaiming the title of world’s most valuable public company,” Rodda said. “The results appear not quite good enough to justify such lofty valuations.”

Apple’s results themselves showed strength across most major financial metrics, even as the market reaction proved sharply negative. The company beat expectations on the majority of its headline numbers, according to Rodda, but stumbled specifically in its Services division and in China, a market facing intense competitive pressure from domestic smartphone manufacturers. That combination of a broadly strong quarter paired with two notable soft spots proved sufficient to trigger a steep selloff in the stock, even though the underlying fiscal quarter set a company record.

The China weakness comes as Apple continues navigating an increasingly competitive smartphone market in the country, where domestic manufacturers Huawei and other local brands have continued gaining market share. Earlier reporting on China’s broader smartphone market showed Huawei and Apple both extending gains during the second quarter of 2026, even as the overall Chinese smartphone market contracted amid rising memory chip prices that pushed manufacturers toward more conservative production strategies. Despite that broader industry backdrop, Apple’s specific results in China during its own fiscal third quarter fell short of what investors had been expecting heading into Thursday’s earnings release.

Apple’s Services division, which includes revenue from the App Store, Apple Music, iCloud storage subscriptions, Apple TV+ and other subscription-based offerings, has increasingly become a focus for investors given its higher profit margins compared with Apple’s hardware business. A shortfall in that segment specifically raised questions among analysts about the near-term trajectory of one of the company’s most closely watched growth drivers, even as the company’s overall hardware business, including iPhone sales, appeared to hold up reasonably well during the quarter.

Friday’s decline stood in stark contrast to the reaction that greeted Amazon’s own earnings, released the same evening as Apple’s results. Amazon shares surged as much as 12% Friday, according to 24/7 Wall St., after the company delivered a blowout quarter powered substantially by strength in Amazon Web Services, its cloud computing division. The 24/7 Wall St. analysis characterized the split between Apple and Amazon’s earnings reactions as reflecting a single underlying macroeconomic theme playing out in opposite directions: both companies face the same tight global supply of memory chips and advanced semiconductors driven by surging demand tied to artificial intelligence, but Amazon has been able to convert that dynamic into stronger cloud revenue growth, while Apple has faced more direct cost and margin pressure on the hardware side of its business as component prices have climbed.

The Invesco QQQ Trust, an exchange-traded fund tracking the Nasdaq 100 that holds both Apple and Amazon among its largest individual weightings, found itself caught between the two companies’ sharply offsetting moves Friday, according to 24/7 Wall St., muting what would otherwise have been a cleaner overall gain for the technology-focused fund following the mixed earnings reactions.

Apple’s earnings arrived as part of one of the busiest stretches of corporate earnings season for major technology companies, with Amazon, Apple and Coinbase all reporting results after Thursday’s closing bell, following blockbuster results from Microsoft and Meta Platforms earlier in the week. Microsoft’s shares had surged roughly 15% Thursday for the company’s best single-day performance in nearly 18 years, after reporting that its Azure cloud computing division grew 43% during the quarter, a result that had helped fuel broader optimism across technology markets heading into Apple’s and Amazon’s reports.

Despite Friday’s sharp decline, Apple’s stock remains up substantially from levels earlier in the year, reflecting the broader rally that has characterized major technology stocks throughout much of 2026 amid continued investor enthusiasm for companies positioned to benefit from growing artificial intelligence infrastructure spending. Friday’s pullback illustrated, however, that even companies posting record financial results can face sharp market reactions when specific segments of their business fall short of elevated investor expectations, particularly for a company carrying the kind of premium valuation Apple has commanded following its recent run to record highs.

With Apple’s next quarterly earnings report still roughly three months away, investors are likely to watch closely in the interim for any additional commentary from company executives regarding the specific challenges facing its Services division and its competitive position in China, particularly given how directly both factors appeared to drive Friday’s sharp reversal in the stock despite the company’s otherwise record-setting quarterly performance.