Apple Inc. (NASDAQ: AAPL) reported better than expected second-quarter results this week, but stocks in the gadget giant fell after management’s careful comments on tariffs and concerns over the performance of its services business reduced investors’ sentiment.
Stock dip
On Friday, Cupertino headquarters stocks remained sluggish after earnings, falling 4% in early trading. AAPL performance has been disappointing in recent past and has been steadily decreasing after peaking last December. Stocks have fallen 18% over the past four months, driven primarily by concerns over the escalation of the US-China trade war.
It is noteworthy that Apple’s quarterly sales and profits consistently beat estimates over two years, demonstrating resilience to market challenges and strength in its business model. Apple CEO Tim Cook warns of uncertainty over trade tensions beyond the first half, reflecting heavy tariffs on imports from China. However, the company relies on supply chain and manufacturing presence in other countries such as India and Vietnam to mitigate the impact of tariffs.
Sales Beat
The tech company’s second quarter revenues exceeded expectations, up from $1.53 per share, per year to $1.65. Net income was $24.788 billion in the second quarter, compared to $23.64 billion in the same period last year. March quarter sales increased from $90.75 billion in the same period in 2024 to $95.4 billion. The top line exceeded estimates. iPhone sales increased by 1.9%. All geographic regions except China recorded revenue growth in the second quarter, with sales increasing across key business segments. Services revenues did not meet expectations despite year-over-year growth of 12%, surpassing other segments.
Commenting on the tariffs, Tim Cook said in his second quarter revenue call, “In the March quarter, we were able to optimize our supply chain and inventory, which limited the impact from tariffs. Currently, in the June quarter, we cannot accurately estimate the impact of tariffs due to uncertainty about potential future actions prior to the quarter, at our expense.”
risk
Apple is subject to an ongoing trade war because it relies on both manufactured and sold products. As a global company, it is extremely sensitive to economic uncertainty and geopolitical tensions. Recently, the company has faced criticism for selling inactive iPhones, and Apple Intelligence’s glitch is an AI system designed to enhance the user experience across devices.
Apple’s shares opened on Friday at $213.32, trading almost low during the session. The stock has been below the average value of 12 months since last month.
