Apple’s CEO, Tim Cook, announced on Thursday that the company is expanding its sources for iPhones and other devices, with a significant portion of iPhones sold in the U.S. being produced in India, and other products such as iPads originating from Vietnam. This strategic shift aims to mitigate the impacts of tariffs imposed by President Trump’s administration. Despite the tariff-related challenges, Apple’s first-quarter earnings exceeded Wall Street predictions, largely due to strong iPhone sales, with minimal effects from tariffs during this fiscal period.
For the current quarter, Apple anticipates an additional $900 million in costs due to the tariffs, although Cook expressed confidence in the company’s business outlook. The California-based company reported a net income of $24.78 billion, translating to $1.65 per share, marking an increase from $23.64 billion, or $1.53 per share, for the same timeframe last year. Revenue also climbed 5.1% to reach $95.36 billion, compared to $90.75 billion previously. Analysts had forecasted $1.62 per share earnings on revenues of $94.19 billion. These figures illustrate Apple’s performance prior to President Trump’s introduction of new tariffs in April, which sparked market volatility and concerns about potential inflation and recession from a trade war.
Thomas Monteiro, an analyst from Investing.com, noted that some sales growth could be attributed to a rush of consumer purchases ahead of anticipated tariff increases, yet Apple’s profit margins remained robust. The company, which heavily relies on Chinese manufacturing, found itself impacted by the tariff conflict, causing its stock to fall by 23% in the wake of the tariff announcements, erasing $773 billion of shareholder value. Although many losses have been recuperated following temporary exemptions for iPhones from tariffs, Apple’s stock remains 5% lower since the initial tariff announcement.
In addition to tariff issues, Apple faced challenges with its iPhone 16 lineup, particularly around its unfulfilled promise of advanced artificial intelligence features. Initial setbacks hindered the rollout of some AI capabilities, affecting marketing campaigns, although the company plans further AI-enhanced features eventually. Apple anticipated that engagement in AI advancements would boost iPhone demand following a minor sales dip last year. Recently, iPhone sales have grown by 1.9% to $46.84 billion in the first quarter, surpassing Wall Street’s prediction of $45.62 billion in sales.
However, Apple’s performance in China has declined, with a 2.3% drop in revenue to $16 billion for the quarter, while other regions experienced sales increases. The anticipation of tariff impacts led to a consumer buying spree when the possibility of price hikes became imminent, but these effects will be more evident in the April-June quarter results due later. Faced with these pressures, Cook has been strategically navigating diplomatic relations with President Trump, fostering engagements to maintain favorable conditions for Apple.
As Apple’s transition to sourcing from India gains momentum, the logistics of a full shift are complex and unlikely to be completed until the following year, maintaining some exposure to the trade war’s uncertainties. Following these developments, Apple’s shares dropped by $5.81, or 2.7%, to settle at $207.51 in after-hours trading.