Shanghai, China—Tech giant Apple appears to be on the upswing after a period of declining revenues, with the company’s latest earnings report for Q1 showing signs of recovery. However, challenges remain, including risks related to the Chinese market that could impact Apple’s growth in the coming months.

In the past year, Apple faced dwindling revenues and a lack of growth catalysts, leading to disappointments for the company. Yet, a recent decent earnings report and the successful launch of the Vision Pro headset indicate a potential turnaround for the Cupertino-based company. Despite some recent share price appreciation, ongoing challenges suggest that Apple’s stock may continue to face selling pressure as unresolved downsides persist.

Apple’s Q1 earnings report revealed a 2.1% year-over-year increase in revenues to $119.6 billion, surpassing expectations by $1.34 billion. The solid performance was attributed in part to the successful release of the latest iPhones in September, which helped boost revenues by 6% to $69.7 billion in the same quarter. Additionally, the company reported record-setting iPhone sales and growth in its services business, which now boasts over 1 billion paid subscriptions.

While the company’s overall revenues declined last year, its services business showcased strong growth, reaching $23.12 billion in revenues, a record for the company. The expectation is that this segment will continue to grow at a double-digit rate, further mitigating potential downsides caused by weaker performance in other areas.

Looking forward, Apple anticipates a release of new iPads and MacBooks in the coming months, along with the potential for the Vision Pro headset to stimulate growth in the wearable segment. The headset’s unique launch strategy has already proven successful, with expectations of selling 600,000 units this year—exceeding previous estimates and potentially boosting revenue by an additional $2 billion.

Despite these positive developments, challenges in the Chinese market loom large for Apple. Revenues in the Greater China region declined in Q1, and local competitors are increasing market share, posing a threat to Apple’s position. Geopolitical tensions and supply chain concerns in China further complicate the company’s prospects, with implications for its stock performance against its peers.

While Apple’s recent successes are promising, the company remains exposed to risks in the Chinese market that could impact its long-term growth potential. The uncertainty surrounding these challenges may limit the stock’s upward potential, leading to a cautious outlook for the company’s performance in the near future.