By MICHAEL LIEDTKE and BARBARA ORTUTAY, AP Expertise Writers
Apple CEO Tim Prepare dinner mentioned Thursday that almost all of iPhones bought within the U.S. within the present fiscal quarter shall be sourced from India, whereas iPads and different gadgets will come from Vietnam as the corporate works to keep away from the affect of President Trump’s tariffs on its enterprise.
Apple’s earnings for the primary three months of the 12 months topped Wall Avenue’s expectations due to excessive demand for its iPhones, and the corporate mentioned tariffs had a restricted impact on the fiscal second quarter’s outcomes.
Prepare dinner added that for the present quarter, assuming issues don’t change, Apple expects to see $900 million added to its prices on account of the tariffs, however Prepare dinner mentioned the corporate stays “confident” on this enterprise.
The Cupertino, California-based firm earned $24.78 billion, or $1.65 per share, within the first three months of the 12 months, up 4.8% from $23.64 billion, or $1.53 per share, in the identical interval a 12 months earlier.
Income rose 5.1% to $95.36 billion from $90.75 billion.
Analysts, on common, have been anticipating earnings of $1.62 per share on income of $94.19 billion, in line with a ballot by FactSet.
The numbers for the January-March interval present a snapshot of how Apple was faring earlier than President Trump’s unveiling of sweeping tariffs in April that rattled the monetary markets amid fears a commerce struggle would reignite inflation and shove the U.S. financial system right into a recession.
“While it is likely that some of the sales growth was driven by consumers accelerating purchases ahead of expected tariff increases, margins remained healthy on the other side of the balance sheet,” mentioned Thomas Monteiro, an analyst at Investing.com. He added that the corporate “still has room for maneuver” whatever the financial backdrop and can “likely not need to significantly deplete cash reserves to keep moving the needle.”
Apple’s reliance on Chinese language factories to make its iPhones and different gadgets thrust the expertise trendsetter into the crosshairs of Trump’s commerce struggle. The publicity triggered Apple’s inventory worth to plunge 23% shortly after the president introduced the severity of the reciprocal tariffs, briefly erasing $773 billion in shareholder wealth within the course of.
Most of these losses have since been recovered after Trump briefly exempted iPhones and different electronics from the reciprocal tariffs, however Apple’s inventory stays down by practically 5% because the April fusillade of tariffs.
Moreover the commerce struggle, Apple has been damage by its incapacity to dwell as much as its personal hype surrounding synthetic intelligence options on the iPhone 16 lineup that got here out final fall.
The expertise wasn’t prepared when the iPhone 16 went on sale. Some AI options have rolled out in elements of the world as a part of software program updates, however Apple nonetheless hasn’t been in a position to dwell as much as its unique promise to make Siri smarter and extra versatile. The missteps prompted Apple to drag promoting campaigns selling AI breakthroughs on the iPhone, though the corporate nonetheless intends to launch extra options powered by the expertise sooner or later.
Apple had been relying on its late entry into the AI craze to revive demand for the iPhone after final 12 months’s gross sales dipped 2% from 2023’s ranges. Apple mentioned Wednesday that its cellphone gross sales climbed 1.9% to $46.84 billion for the primary three months of the 12 months. Wall Avenue had anticipated iPhone gross sales of $45.62 billion.
However the firm continues to see its China enterprise decline, with income from the Larger China area down 2.3% to $16 billion for the quarter. Different areas, together with the Americas, Europe and the remainder of Asia, noticed gross sales will increase.
When Trump initially indicated his 145% tariffs on Chinese language-made items would apply to the iPhone, U.S. shoppers rushed to shops to purchase new gadgets slightly than danger costs spiking increased after the duties started driving up prices. However the flurry of panic shopping for gained’t present up till Apple experiences its outcomes for the April-June quarter this summer season.
Trump’s commerce struggle has ramped up the stress on Prepare dinner to work the identical diplomatic sleight of hand that enabled the iPhone to keep away from being stung by the China tariffs that the president imposed throughout his first administration.
Prepare dinner signaled his intention stay on good phrases with Trump by arranging personal conferences with him and personally donating $1 million to the president’s second inauguration ceremony earlier than sitting on the dais when Trump was sworn into workplace on January 20. Apple subsequently introduced plans to take a position $500 billion within the U.S. whereas hiring 20,000 staff in the course of the subsequent 4 years.
Trump’s commerce struggle is also prompting a push to Apple to shift all of the manufacturing of the iPhones that it sells within the U.S. from China to India, the place the corporate has been build up its provide chain for the previous seven years, in line with a latest story within the Monetary Instances. However the difficult logistics of creating such an enormous transfer possible couldn’t be accomplished till subsequent 12 months, on the earliest, leaving Apple susceptible to the vagaries of Trump’s commerce struggle.
Apple’s inventory fell $5.81, or 2.7%, to $207.51 in after-hours buying and selling.
Initially Printed: Might 1, 2025 at 5:06 PM EDT
