SAN FRANCISCO — Apple Inc.’s latest quarterly earnings report delivered better-than-expected overall revenue and earnings, but concerns over deepening challenges in China and escalating tariff costs sent the tech giant’s shares down as much as 4.2% in late trading on May 1.
The iPhone maker reported second-quarter revenue of $95.4 billion, topping analysts’ expectations of $94.6 billion, and earnings per share of $1.65 versus the estimated $1.62. However, weaker-than-forecast performance in China and fresh warnings about rising costs from tariffs underscored mounting geopolitical and competitive risks.
Sales in China, a long-standing growth market for Apple, declined 2.3% to $16 billion—falling short of the $16.83 billion analysts had anticipated. The dip reflects both softening demand and intensifying competition from local brands like Huawei and Xiaomi, as well as growing regulatory headwinds, including restrictions on foreign-made devices in Chinese workplaces.
Adding to investor anxiety, Apple said it expects up to $900 million in additional costs from tariffs in the current quarter. CEO Tim Cook acknowledged the uncertainty, noting that while Apple may avoid the steep 145% China tariff floated by the Trump administration, further tariffs on electronics remain imminent.
“We don’t have anything to announce on pricing at this time,” Cook said during the earnings call, emphasizing that the company is closely monitoring developments.
Apple’s supply chain is already undergoing a strategic shift to reduce its China dependency. Cook confirmed that India now manufactures half of the iPhones destined for the U.S. market, while production of Apple Watches, AirPods, iPads, and Macs is increasingly being relocated to Vietnam to minimize tariff exposure.
Despite near-term volatility, Apple announced a $100 billion expansion of its share buyback program and a 4% dividend increase—moves designed to bolster shareholder confidence amid a 15% year-to-date drop in stock value as of May 1.
Sales of iPhones totaled $46.8 billion, slightly above projections of $45.9 billion but showing only marginal growth from the $46 billion recorded a year earlier. Analysts noted a lack of major innovation in the latest iPhone lineup, which largely mirrors the 2023 iPhone 15 Pro in terms of features, including AI capabilities.
While AI is a strategic focus for Apple, delays in deploying its Apple Intelligence platform in China and updates to Siri have raised questions. Cook defended the pace, saying, “We are making progress, and we look forward to getting these features into customers’ hands once they meet our high-quality bar.”
Although Apple acknowledged the potential for a surge in June-quarter sales as consumers rushed to buy devices before potential price hikes, it offered no clear forecast for future growth. The company also flagged “trade and other international disputes” as key risks in its quarterly filing—a warning typically reserved for annual reports.
With no immediate clarity on tariffs, continued weakness in China, and questions around its AI roadmap, Apple faces a critical period as it seeks to reassure investors and maintain its leadership in the global tech industry.