SAN FRANCISCO - Apple said its third-quarter iPhone sales were better than expected and forecast more gains as it bets on artificial intelligence (AI) to attract buyers, even as its overall China business disappointed.

Shares of the company rose nearly 1 per cent in extended trading on Aug 1, outperforming other tech stocks that were broadly lower.

Apple is expected to launch this fall what analysts have called the biggest software upgrade for the iPhone. It includes AI features and comes at a time when rivals such as Samsung have been quicker to roll out similar services.

Apple said revenue in its fiscal fourth quarter would grow at a level similar to the 4.9 per cent increase it posted in the April-June period, which was better than analysts' estimates.

Sales of iPhone also improved in the third quarter, falling just 0.9 per cent compared with the 2.2 per cent drop analysts expected.

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