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- Apple reported fiscal second-quarter earnings on Thursday.
- The tech giant beat revenue and earnings-per-share estimates, but service revenue disappointed.
- It estimates tariffs could add $900 million to costs in the current quarter.
Apple reported fiscal second-quarter earnings on Thursday after the closing bell, and while revenue — including from iPhones — and EPS beat estimates, sales from its key Services unit and from Greater China disappointed.
Apple’s stock slid more than 3% in volatile after-hours trading shortly after the results.
A conference call with investors started around 5 p.m., where CEO Tim Cook will likely be asked about plans to shift manufacturing from China to India, other impacts of Donald Trump’s tariff plans, iPhone sales — including the success of its most recent cheaper handset, and of course its plans for Apple Intelligence.
The company reported revenue for the period of $95.36 billion, beating the consensus analyst estimate of $94.59 billion. But service revenue came in at $26.65 billion, missing the forecast of $26.72 billion.
Shares rose 0.4% ahead of the close on Wednesday, bringing the stock’s year-to-date loss to 15% at the close.
And that’s a wrap on the conference call
About that $900 million in tariff costs…
Jackal Pan/Getty Images
Unlike other tech companies this spring, Apple was willing to say the word “tariff” during its analyst call today. And more than just that: The company was willing to spell out the financial effects the looming Trump tariffs will have on its business: It projects that they will add $900 million in costs in the June quarter.
OK. But what exactly does that mean? I’m not 100% sure, and analysts also seemed unclear, and followed up with multiple questions for CEO Tim Cook.
What Cook seemed to suggest is that Apple thinks the $900 million number holds if:
Got it? OK. But what does that $900 million mean for Apple and its consumers? Would Apple consider eating those costs, or passing them along to consumers? Cook wouldn’t answer that one directly.
It is worth noting $900 million just isn’t that much money for Apple, which generated $24.8 billion in profits this quarter. If Apple had to swallow that cost for many quarters to come, there’s a good chance Wall Street would be okay with that. But at the same time, Cook stressed that the $900 million figure he’s presented for the next quarter may not be applicable for future quarters, for a variety of reasons. Crystal clear, right?
— Peter Kafka
Cook’s update on WWDC 2024’s promises
“We’ve delivered a lot,” Cook says when asked about the status of the features it teased at WWDC last year.
Cook emphasizes, once again, Apple’s recent rollout of Apple Intelligence in more languages. On the updated Siri, it needs “more time.”
— Jordan Hart
Apple is remaining ‘engaged’ in tariff talks
Tim was asked about how product prices might be impacted by tariffs and Cook didn’t give much away.
He said “we’re very engaged on the tariff discussions.” He said the company “will continue to engage on the pricing piece,” but the company has nothing to add about how product prices might be impacted today.
He added that the operational team “has done an incredible job around optimizing the supply chain of the inventory.”
— Jordan Hart
Tariff panic-buying didn’t bump sales last quarter, Cook says
VW Pics/VW Pics/Universal Images Group via Getty Images
“We don’t believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs,” Cook says.
He added that its channel inventory at the start of the quarter was similar to that of the end.
— Jordan Hart
Apple is placing production bets outside China
Cook says he expects the “majority” of iPhones sold in the US during the June quarter to be made in India.
Vietnam, he says, will be the country of origin for almost all of its other products coming into the US. The rest of the world still relies on China.
— Jordan Hart
As they stand, tariffs could cost Apple $900 million
Apple estimates that the current tariff rates will cost the company $900 million this current quarter if nothing changes.
“We are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter. However, for some color, assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs. This estimate should not be used to make projections for future quarters, as there are certain unique factors that benefit the June quarter,” it said.
— Jordan Hart
Apple is “making progress” on Siri overhaul
Cook says Apple is still getting the AI-powered Siri ready for iPhone owners.
“We need more time to complete our work on these features so they meet our high quality bar,” Cook says
Tim Cook makes it clear that Apple is using US suppliers
Cook shouts out Apple’s four-year $500 billion spending plan partly for expanding its teams and facilities in Arizona, Nevada, Iowa, Oregon, North Carolina, and more.
“We expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year,” Cook says.
— Jordan Hart
Apple got right into tariff chat
In its standard investor call blurb, the company said:
“Our discussion today will consist of forward looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation and future business outlook, including the potential impact of tariffs and other trade measures and macro economic conditions on the company’s business and results of operations. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast.”
EMARKETER says tariffs might’ve boosted Apple’s ‘better-than-expected results’
As Trump ups tariffs on China, some consumers chose to get ahead of potential price increases by upgrading their phones immediately.
However, Wall Street still wants to know Cook’s plan for a turbulent trade environment, tech analyst Jacob Bourne said.
Cook is expected to shed light on how tariffs will affect consumers, and if the answer to its challenges lies in a manufacturing shift to India.”This balancing act comes during a crucial time as Apple prepares for WWDC and its next product cycle, where pricing strategy will be a focal point amid economic and supply chain uncertainty,” Bourne said.
— Jordan Hart
Apple service revenue misses forecasts
Apple stock rises 0.4% ahead of earnings
Yahoo Finance
Apple stock rose 0.4% ahead of its earnings release on Thursday after the closing bell. The S&P 500 closed 0.6% higher, while the tech-heavy Nasdaq Composite rose 1.5%.
Stocks were broadly higher on Thursday after strong earnings results from Meta and Microsoft.
Jefferies says Apple could face challenges in India
Jefferies said Apple was likely to beat the firm’s revenue growth estimate of 0.9% for the first quarter.
Still, analysts saw risks to Apple’s profit margins, due to potential challenges the company may face as it looks to expand its iPhone production in India.
“This makes sense if we believe US reciprocal tariff on India will be very low, or AAPL gets an exemption. However, this may not be realistic,” analysts said, pointing to “more complicated assembly” of some of Apple’s newer and upcoming products. “Therefore, we still see cost/margin risk at AAPL.”
Jefferies rates Apple at “Hold” with a $167 price target, implying 22% downside from Wednesday’s intraday high price.
Is a US court ruling enough to finally break open Apple’s App Store?
Justin Sullivan/Getty Images
Federal judge Yvonne Gonzalez Rogers said Apple was in “willful violation” of a 2021 ruling she had made, and that she would refer the company for a possible criminal prosecution.
That’s pretty newsworthy. But what about the rest of Rogers’ ruling?
Well, that could be pretty newsworthy, too.
It’s possible that this could finally be the thing that fundamentally changes the way Apple operates its App Store — an increasingly key source of the company’s revenues.
Or, it might not.
— Peter Kafka
Bloomberg Intelligence: Apple supply chain in focus
Looming tariff risks for Apple are likely going to drive investor questions around its massive exposure to China’s manufacturing industry, according to Anurag Rana, senior industry analyst at Bloomberg Intelligence.
“Apple’s sourcing strategy will likely remain the most discussed topic on its 2Q earnings call given the company’s high dependency on China for both assembly and components,” Rana said in a note last week.
Rana said that while Apple’s products have been exempted from Trump’s tariff list, there is still a risk that those surcharges return.
Bank of America stays upbeat despite tariff risk
Justin Sullivan/Getty Images
Bank of America reiterated its “Buy” rating on Apple, citing the company’s resilient earnings, stable cash flow, and potential benefit from incorporating AI on its devices.
Still, the company’s earnings estimates for the current quarter could take a “more severe” hit due to tariffs, particularly if tensions between the US and China escalate, BofA analysts wrote.
“However, we note that Apple has many options to mitigate downside risk to estimates. These include: sourcing more iPhones from India, applying higher pricing in products/services, pressuring its supply chain for better economics, introducing new products at higher price points and changing cadence of product releases,” the bank added.
Analysts issued a $250 price target for the stock, implying a 17% upside from current levels.
iPhone sales will come into sharp focus
As Apple’s biggest revenue driver, iPhone sales have always taken center stage during Apple’s earnings, and the flagship product will be even more in focus this time around.
Investors will look for clues about the success of the cheaper iPhone 16e handset released in February. They’ll also look for indications from the company about the role of its AI-focused services, bundled up as Apple Intelligence, in spurring interest in new devices.
Apple has also had a harder time getting new iPhones into pockets in its most important international market, China, as domestic players like Huawei have tried to entice consumers with advanced phones rivaling the iPhone with an aggressive pricing strategy.
iPhone pricing is a key focus at a time when China tariffs have raised concerns among analysts that higher costs could be passed on to consumers.
— Hasan Chowdhury
CFRA says to expect a pull-forward in consumer demand
Anadolu/Anadolu via Getty Images
Angelo Zino, senior equity analyst at CFRA Research, said a pull-forward in consumer demand as a result of buyers getting ahead of tariffs should help Apple beat Wall Street’s revenue growth expectations of 4% when it reports results.
“We look for revenue growth to have exceeded Mar-Q expectations of 4%, partly reflecting demand pull-ins in the U.S. given policy uncertainty, especially for higher-priced products where tariff risk is greater,” Zino said in a note last week.
CFRA rates Apple at “Buy” with a $235 price target.
Apple just took a hit in court — and it could cost them on services revenue
One day before earnings, Apple lost a key legal battle over its App Store rules. A federal judge ruled that Apple violated a 2021 court order by making it too hard for app developers to point users to alternative payment options — and by slapping a 27% fee on outside purchases.
The judge even referred Apple and one of its executives to federal prosecutors for potential criminal contempt, saying they may have misled the court.
It’s a blow to Apple’s high-margin Services business, which includes the App Store, and has been a major source of growth. Expect analysts to ask how this could impact revenue and whether Apple will be forced to loosen its grip on developers.
— Pranav Dixit
JPMorgan expects Apple to remind investors of its resilience
Cheng Xin/Getty Images
JPMorgan said Apple’s second-quarter results should remind investors just how resilient the iPhone maker is amid rising macroeconomic uncertainties.
The bank increased its quarterly revenue estimates for the company by more than $2 billion, to $95.8 billion from $93.5 billion, partly due to the company’s likely increased sales ahead of potential tariffs.
Analysts also said Apple’s stock price decline this year de-risks it to a degree, with its price now more attractive for investors. Apple stock is down 15% year-to-date.
The bank issued an “Overweight” rating on the stock with a $245 price target, implying a 14% upside from its current level.
All eyes on Apple’s India expansion as China tensions rise
Apple’s earnings come amid rising US-China tensions, sparked by President Donald Trump’s tariffs of up to 145% on imports from the country. The trade war poses risks for Apple, which makes about 90% of its products in China.
To mitigate those risks, Apple is reportedly accelerating its shift to India, aiming to significantly ramp up iPhone production there by 2026. But analysts caution that manufacturing in India costs Apple 5% to 8% more than it does in China, potentially squeezing margins and adding logistical hurdles.
Expect investors to press Apple executives on how quickly and efficiently they can scale operations outside China.
— Pranav Dixit
Goldman Sachs is looking for Apple to answer 6 questions
Justin Sullivan/Getty Images
Analysts at Goldman Sachs said investors will be looking to hear answers to six key questions:
- How will tariffs impact margins and demand?
- How has the recently launched iPhone 16e performed?
- What are Apple’s new product releases for the rest of 2025?
- How has Apple’s competition in China evolved?
- What’s next for Apple Intelligence?
- How could Google’s antitrust lawsuit impact Apple’s revenue?
As for the actual results, Goldman analysts expect Apple to beat earnings per share expectations of $1.61 and revenue expectations of $94.0 billion in the quarter.
Apple earnings expectations: Consensus first-quarter revenue estimate is $94.62 billion.
Second quarter
Third quarter
- Capital expenditure estimate: $2.55 billion
Full-year 2025
- Capital expenditure estimate: $10.77 billion
Source: Bloomberg