Even Apple Inc. (Nasdaq:AAPL) isn't immune to a slowing smartphone market. Despite setting a new all-time quarterly profit record for any U.S. public company by going up 2 percent from last year, the electronics giant failed to meet Wall Street expectations with its latest smartphone, the iPhone 6S, let alone its other core products, the iPad and Mac.

Apple posted earnings of $18.4 billion on $75.9 billion revenue, beating consensus projections of $18.22 billion in profit but falling short of a projected $76.67 billion in revenue, according to analysts polled by Thomson Reuters. This compares to the $18 billion profit on $74.6 billion in revenue made during the same period last year. Apple’s revenue fell on the low side of its October guidance, which placed revenue expectations between $75.5 billion and $77.5 billion.

Tim Cook Apple Inc. Earnings Q1 2016 Apple Inc. CEO Tim Cook looks at an iMac after a presentation at Apple headquarters in Cupertino, California. Photo: Reuters/Robert Galbraith

More worrisome: iPhone sales were essentially flat last year, the first time sales have not grown since the first iPhone was released in 2007, meaning the incremental upgrades given to the iPhone 6S weren't enough to grow sales. Apple sold 74.78 million iPhone units during the all-important holiday quarter, compared to the 74.5 million during the same period last year. Wall Street expected upward of 76.5 million units shipped during the period, according to consensus estimates from analysts polled by Fortune.

As expected, Apple CEO Tim Cook focused on the positive:  “Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” Cook said in a statement. “The growth of our services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of 1 billion active devices.”

With iPhone growth slowing, analysts expect unit sales to go into negative growth territory for the first time later this year, in part due to murmurs from Apple's supply chain about reduced iPhone 6S orders. Slowing growth in China’s smartphone market has also stoked investor concerns. For 2015, the Chinese smartphone shipment is expected to slow to 1.2 percent, down from 19.7 percent in 2014, according to IDC estimates.

But despite their fears, greater China continues to be a large revenue driver for Apple, accounting for $18.4 billion in revenue, up 14 percent from the $16.14 billion the region drew in for the company last year. That being said, the segment is still one of the largest revenue markets for Apple, second only to the Americas.

Apple is reportedly looking into a number of new revenue sources, such as a streaming live television service and an electric car. But at least for now, neither of the two products are expected to debut in the short term. Apple's vehicle project, code-named Titan, isn’t anticipated to materialize before 2019 at the earliest.  In the meantime, analysts and investors are keeping a close eye on Apple’s next full smartphone redesign — the iPhone 7 — which anticipated to launch sometime in the second half of 2016.

“The Apple growth story will be tied to iPhone for the foreseeable future and especially over the next 12 to 18 months,” said Daniel Ives, managing director at FBR capital markets.  “The stock is so reliant on what's going to happen with iPhone 7.”

Despite short-term fears from Wall Street, several analysts still perceive Apple’s stock to be highly undervalued and have set their price targets accordingly, such as RBC Capital’s $130 target and Piper Jaffray’s $179 target price. Their targets are largely driven by expectations on iPhone 7 sales later this year. But before that happens, Apple is also expected to launch a 4-inch iPhone in March, which may be called the iPhone 5se.

As for the rest of Apple’s products, Macs fell short in the period with sales reaching 5.3 million units, down 4 percent from the 5.52 million units sold last year. Even Apple has been affected by a global PC market that has continued to shrink, according to IDC.

Its tablet line didn't fare any better. Despite the launch of a 12.9-inch iPad Pro in November, the iPad continued to decline in the holiday quarter with sales of 16.1 million units, down 25 percent from 21.42 million units sold in the same period last year. That compares to Wall Street expectations of about 18 million units for the period.

As with previous quarters, Apple has tucked away the Apple Watch and its Apple TV into the Other Products category, which grew to $4.35 billion, a 62 percent increase from $2.69 billion a year prior.

Apple’s fiscal 2016 second-quarter guidance places revenue between $50 billion and $53 billion, and gross margins between 39 and 39.5 percent. Its estimate comes in below Apple’s fiscal 2015 second quarter revenue of $58 billion. The next dividend of 52 cents a share will be payable on Feb. 11 to shareholders of record as of close of business on Feb. 8.