iPhone Sales Top Expectations, But Apple’s Tariff Ambiguity Rattles Investors
Apple Inc. delivered stronger-than-expected earnings in its latest quarter, with iPhone sales outperforming Wall Street estimates. However, investors were left unsettled by the company’s vague stance on the potential impact of tariffs — a concern that overshadowed the otherwise solid results and sent shares down nearly 4% in after-hours trading Thursday.
While CEO Tim Cook isn’t directly to blame, Apple is operating in an unpredictable trade environment. The company projected $900 million in additional costs for the June quarter, assuming current tariff rates remain unchanged. This guidance does not account for a potential economic slowdown, adding another layer of uncertainty.
Despite the murky outlook, Apple posted respectable numbers for the quarter:
- iPhone revenue reached $46.8 billion, beating the $46 billion forecast.
- Earnings per share came in at $1.65, above the $1.62 consensus.
- Total revenue hit $95.4 billion, surpassing expectations of $94.5 billion.
Still, some results came in underwhelming.
- Services revenue, Apple’s most reliable growth driver, landed at $26.64 billion — just shy of the $26.70 billion estimate.
- Greater China revenue was $16.0 billion, nearly $1 billion below analyst projections.
These misses, coupled with the narrow margins by which Apple beat estimates, weren’t enough to calm concerns about the company’s performance going forward — particularly as questions linger over whether the iPhone sales surge was influenced by consumers rushing to buy ahead of potential tariff hikes.
Cook pushed back against this narrative, stating there was no sign of demand being pulled forward, citing stable channel inventory levels throughout the quarter as evidence.
Apple offered limited visibility beyond the June quarter but did provide some insight into its evolving supply chain. Cook noted that 50% of U.S.-bound iPhones now come from India — a figure expected to grow, making India the primary source for iPhone imports in the third fiscal quarter. Nearly all iPads, Macs, Apple Watches, and AirPods for the U.S. market will originate from Vietnam.
Cook’s comments suggest Apple anticipates higher tariffs on Chinese imports than on those from India or Vietnam, consistent with existing tariff structures across other industries. Devices shipped outside the U.S. will continue to be manufactured primarily in China.
Despite investor unease, some see Apple as well-positioned to adapt. Kevin Cook, a strategist at Zacks, called the $900 million tariff cost minimal and praised Apple’s proactive shift in production. “I am highly confident that if any global tech company can adapt with resiliency and redundancy, it will be Apple,” he said.
