Apple has forecast stronger-than-expected revenue for the current quarter, despite warning of a $1.1 billion impact from U.S. tariffs. The company reported third-quarter earnings that exceeded Wall Street expectations, driven by robust iPhone sales and a rebound in its China business. Apple CEO Tim Cook acknowledged that tariffs remain a significant challenge, with $800 million in related costs already absorbed in the June quarter, but emphasized the company’s ability to navigate the complex trade environment.
For the fiscal third quarter ending June 28, Apple reported revenue of $94.04 billion, a 10% increase from the same period last year. Analysts had projected revenue of $89.54 billion, according to LSEG data. Earnings per share stood at $1.57, surpassing forecasts of $1.43 per share. Apple’s Americas segment, which includes the U.S. and is most exposed to tariff fluctuations, posted a 9.3% increase in sales to $41.2 billion.
iPhone sales rose 13.5% to $44.58 billion, outperforming analyst expectations of $40.22 billion. Cook attributed about 1 percentage point of Apple’s 9.6% overall sales growth to customers purchasing ahead of potential tariff hikes. The company has been relocating its supply chain to mitigate tariff risks, shifting production of U.S.-bound iPhones to India and sourcing Macs and Apple Watches from Vietnam.
Tariff challenges mount as Apple shifts production to mitigate risks
Apple also saw improvement in Greater China, where sales reached $15.37 billion, up from $14.7 billion in the same quarter last year. The increase was partly driven by a Chinese subsidy program aimed at revitalizing the smartphone market. This turnaround followed two consecutive quarters of declining sales in the region. Cook noted that the subsidy had a positive impact on certain Apple products.
Despite the strong quarterly performance, Apple’s stock has underperformed peers such as Microsoft and Meta, which have seen significant gains due to aggressive AI investments. Apple shares rose 3% in after-hours trading following the earnings announcement but remain down 17% for the year. Analysts have raised concerns about Apple’s slower pace in integrating advanced AI features into its product lineup, as rivals accelerate their AI strategies.
Analysts urge Apple to accelerate AI efforts to remain competitive
Apple’s services division, which includes the App Store, iCloud, and other digital offerings, generated $27.42 billion in revenue, surpassing expectations of $26.8 billion. However, sales of wearables and iPads fell short, with wearables revenue declining to $7.4 billion and iPad sales slipping to $6.58 billion. Mac sales performed better, reaching $8.05 billion compared to expectations of $7.26 billion.
Looking ahead, Apple forecasts revenue growth in the “mid to high single digits” for the current quarter, exceeding analysts’ estimates of 3.27% growth. The company also projected gross margins between 46% and 47%, above consensus expectations of 45.9%. Cook assured investors that Apple is “significantly growing” its AI investments and remains open to acquisitions that could accelerate its AI roadmap. – By Content Syndication Services.