While Apple reported decent quarterly results, its shares dropped as concerns about tariffs, court rulings and AI progress dominated.
Apple reported good results last night after markets closed, with quarterly revenue of $95.4bn, up 5pc year on year, and quarterly diluted earnings per share of $1.65, up 8pc year on year, with services seeing strong progress.
However, the US tariffs threat saw the iPhone giant budget an extra $900m costs minimum for next quarter. As a result, share prices dipped by more than 4pc last night, after a week that saw other tech shares such as Meta and Microsoft regain some lost ground in the markets.
“Today Apple is reporting strong quarterly results, including double-digit growth in Services,” said Tim Cook, Apple’s CEO.
“We were happy to welcome iPhone 16e to our lineup, and to introduce powerful new Macs and iPads that take advantage of the extraordinary capabilities of Apple silicon.”
Services came in very much in line with estimates. Services include the App Store and Apple TV+, and they saw growth of 12pc to $26.7bn in the quarter. However Apple’s App Store revenues could also be under threat, given the Epic ruling earlier this week that saw it being ordered to open its App Store fully to third-party payments.
In a sign of Apple’s concern over the ongoing tariff chaos, on its earning call last night Cook warned that Apple expects to add $900m in costs next quarter.
Apple of course has historically manufactured the bulk of its products in China, although it has been making efforts to move more manufacturing to India and Vietnam. Another ominous sign was that sales in China fell 2.3pc in the quarter, coming in below analysts’ expectations, as local phone competitors such as Huawei and Xiaomi pick up the slack.
Another challenge for Apple comes from its delay in launching its AI Intelligence offering in China, and what is perceived as problems in general with its AI offering not keeping up with competitors.
“Apple’s recent AI enhancements have been minimal, and the more sought-after features, like the Siri revamp, are being pushed out to 2026,” said Forrester VP and principal analyst Dipanjan Chatterjee.
“Apple’s strong brand equity has absorbed much of this damage without customer defection, but this equity is being steadily eroded as Apple fails to make good on its AI promises. The tariff brouhaha may have distracted many Apple watchers from the AI conversation, but this intrinsic factor remains vital to Apple’s success.”
“We will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term,” Cook said during the call, per Bloomberg. Analysts will be keeping a close eye on those very decisions.
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