Up to this point, Apple has seen sales crater in China. In the fourth quarter, sales tumbled 30 percent there, as local manufacturers like Huawei gained ground.
Services, which include the App Store, iTunes, Apple Music, Apple Pay and iCloud, hit $7.17 billion, above the $6.91 billion projected by StreetAccount. With a growth rate of 18 percent year-over-year, services has become the fastest growing part of the business as iPhone sales have flattened out.
"They need to make more money off [the iPhone] than just us buying a new phone every year…" Kevin Landis, chief investment officer of Firsthand Capital Management and Apple shareholder, told CNBC's "Closing Bell." "Services will hold the key there."
The number of users of Apple Pay have tripled over the past year, Cook said on the conference call, with transaction volume up 500 percent, year over year.
The average adult smartphone user will spend an average of 41 minutes each day listening to digital audio via an app in 2017, eMarketer estimates. To that end, Apple is reportedly considering adding more original TV shows and films to its offerings, although that project has been confirmed independently by the company. The company has also released new wireless earbuds, AirPods, that are a "magical" experience, Cook said.
Despite a new U.S. president that has promised to lower corporate taxes, Apple is projecting a tax rate of 26 percent in the second quarter, the same prediction it had for the first quarter.
In a conversation with CNBC, Tim Cook also addressed some of the trade rhetoric being put forth by President Donald Trump, including the prospect that President Donald Trump could declare a holiday and allow the company to bring back some of its foreign cash, and rising trade tariffs.
"Repatriation is front and center, and that is good for the country and good for Apple," Cook told CNBC. "The border tax would hit the middle class consumer."
Shares of Apple have risen more than 6 percent over the past 3 months, amid the holiday shopping season, and following the release of the iPhone 7, new MacBook Pro, and AirPods.