Apple (AAPL  ) reported an extremely strong quarter, in part to people using their stimulus checks on buying new phones and laptops. The company exceeded estimates for sales and earnings, yet its share price finished flat on the day. Further, the company also announced an additional $90 billion in share buybacks.

Inside the Numbers

In Q1, Apple reported $1.40 in earnings per share which topped estimates of $0.99 per share. Revenue came in at $89.6 billion while analysts were forecasting $77.4 billion. This is a 54% increase from last year's Q1.

Notably, strength was widespread with double-digit growth in every category with iPhone sales increasing by 65%. Mac sales grew 70%, while iPad sales were up 79%, compared to 2020's Q1.

The company also announced a 7% hike in its dividend to $0.22 per share in addition to its $90 billion buyback. Services revenue came in at $16.9 billion which topped forecasts of $15.6 billion for a 27% increase. Many believe this segment will be the future growth driver for the company. Notably, gross margins also ticked up to 42.5% from 39.8%, although the company didn't give an explanation for why. This is certainly surprising as many companies are grappling with higher costs.

Apple didn't issue any guidance for the upcoming quarter or the full year. Although, CFO Luca Maestri said that revenue should rise by double-digits, and the company could face some production issues due to the worldwide chip shortage.

Additionally, the company's forecast of a major iPhone upgrade cycle seems to be coming true with the 5G-enabled iPhone 12s. Sales in Asia were especially strong, increasing 88% to $17.7 billion. Another impressive metric was the company reporting 660 million paid subscribers across its platform, a 40 million increase from the previous quarter.

Stock Price Outlook

Typically, such a strong report would lead to massive gains for a stock. Yet, this dynamic of "strong earnings beat, share sell-off" has happened numerous times this earnings season. One possibility is that investors may be thinking that we've hit "peak earnings". Therefore, forward-looking investors are taking the opportunity to sell into strength.

Certainly, the company will face tougher comps and could see production disruptions if the chip shortage persists. Additionally, consumers could prioritize spending on travel, experiences, and services which at the expense of technology, with the economy reopening.

However, weakness would likely be a buying opportunity as Apple's PE is around 25 which puts it in line with the S&P 500 (SPY  ) despite faster growth and higher margins. Yet, the market's consistent reaction to earnings beats is an indication that risk appetites may be shifting.