Fiscal second-quarter earnings show that the Apple (AAPL-0.39%) hasn’t lost its shine.
Thursday after the bell, the company reported $95.4 billion in revenue, up 5% year-over-year, and quarterly diluted earnings per share of $1.65, up 8% year-over-year amid robust demand for its products, even as geopolitics threaten its supply-chain wizardry. But while Apple beat Wall Street’s earnings expectations for the fifth quarter in a row — $1.60 EPS and $94.2 billion in revenue — sales from its key services unit and from China disappointed.
Apple’s second-quarter earnings were buoyed by American consumers rushing to buy Apple products before President Donald Trump’s far-reaching tariffs could really take hold. The company also released the iPhone 16e in its second quarter, a lower-end phone that comes with limited AI features.
As a whole, Apple beat expectations across much of its hardware department, reporting iPhone revenue of $46.84 billion (versus $45.84 billion estimated), Mac revenue of $7.95 billion (versus $7.77 billion estimated), and iPad revenue of $6.4 billion (versus $6.20 billion estimated).
Yet its services segment — which includes the App Store, iCloud, Apple Music, and other recurring streams — just missed expectations, coming in at $26.65 billion, below the $26.70 billion analysts anticipated. Services revenue was still up 11.65% from a year ago.
Apple’s stock slid more than 2% in volatile after-hours trading shortly after the results.
Apple was among the hardest-hit of the tech giants because of its exposure to China, where it currently manufactures 90% of the iPhones it sells in the U.S. Almost every question on a post-earnings call had to do with tariffs. Apple CEO Tim Cook said the company saw “limited impact” from tariff-related effects this quarter, largely due to a temporary exemption for electronics.
“We are uncertain of potential future actions prior to the end of this quarter,” he said.
But, he added, if current global tariff rates remain the same, the financial impact could be significant next quarter: Apple could see an estimated $900 million added to its costs for the June quarter.
President Donald Trump’s tariffs-induced trade war has turned into a structural headwind for Apple’s global operations. To mitigate tariff risks, Apple is accelerating its shift away from China. Now, Cook said, most of Apple’s third-quarter iPhone sales will come from devices assembled in India, with other products increasingly produced in Vietnam.
Apple got head of potential tariff implementations by shipping approximately $2 billion worth of iPhones from India to the U.S. ahead of potential tariff implementations. This move was intended to maintain inventory levels and avoid price hikes due to anticipated tariffs.
On the post-earnings call, Cook was also asked about a blockbuster antitrust ruling yesterday that said the company violated an order to reform its App Store. Cook said the company “strongly disagrees” with the ruling and that it will be appealing the ruling.
The post Apple earnings beat expectation as Americans rush to buy iPhones before tariffs appeared first on Quartz.
