Spurred by strong iPhone 7 and iPhone 7 Plus holiday sales, the Cupertino, Calif.-based company reported first-quarter earnings rose to $3.36 per share on record revenue of $78.4 billion, up 3%, besting Wall Street analysts' estimates.

The results snapped a string of three straight quarters of declining iPhone shipments, which contributed to its first fiscal-year sales drop in more than a decade. And the results sent Apple shares up 3.5% in after-hours trading.

Analysts had forecast earnings of $3.22 per share on sales of $77.3 billion, according to S&P Global Market Intelligence. Net income fell 3% to $17.9 billion.

Apple's iPhone sales machine to make a comeback

Apple CEO Tim Cook told CNBC it was a "dynamite" quarter.

A rebound in sales of Apple's flagship product, iPhone, contributed mightily to the financial reversal. Apple shipped 78.3 million iPhones during the quarter, and consumer demand for the higher priced iPhone 7 Plus added to its top line.

Market researcher Factset had predicted sales of 78 million, up from 74.8 million in the same quarter a year ago.

Apple Services had as much to do with the record quarter as iPhone, soaring 18% to $7.2 billion. "It is driving overall revenue growth, and will continue to for the next few years," says Bill Kreher, a technology analyst at Edward Jones. "It reduces the pressure of Apple creating hit products every few years."

The rally could be short-lived, however: Apple gave ho-hum guidance of revenue of $51.5 million to $53.5 million in its current quarter.

Apple's revenue has — and will continue — to depend on iPhone sales, says Thomas Husson, a principal analyst at market researcher Forrester.

Apple also reported a cash pile of $246.1 billion, most of it overseas. Should President Trump make good on his vow to allow companies to return offshore profits without onerous taxes, it would be "very good for the country and very good for Apple," Cook said in a conference call Tuesday.

The news wasn't all good. Apple reported year-over-year revenue declines in China and for iPad.

Shares of Apple have risen 9% since the election, contributing to the Dow Jones industrial average's rise over 20,000, and they're up 25% in the past year. That compares to a 12-month rise of 21% for the Nasdaq Composite.

Apple's ability to protect its turf in the smartphone market as Samsung attempts to rebound from its Galaxy Note 7 recall and Google pushes its Pixel phone will be closely scrutinized by Wall Street over the next few quarters, according to Daniel Ives, senior vice president of finance and corporate development at cloud-computing company Synchronoss Technologies.

What momentum Apple has is expected to build with the highly anticipated introduction of its 10th-anniversary iPhone, expected later this year.