Apple, Inc. (AAPL) shares fell on Thursday after the company warned that President Donald Trump’s tariffs could raise its costs by $900 million, tarnishing a quarterly earnings beat.
Cupertino, California-based Apple reported earnings per share (EPS) of $1.65 for the second quarter of the fiscal year 2025, marking 8% year-over-year (YoY) growth. The bottom-line result exceeded the Finchat-compiled consensus estimate of $1.61.
Revenue rose 5% YoY to $95.4 billion compared to the $94.75-billion consensus estimate, aligning with the guidance for mid-single-digit growth.
CEO Tim Cook said, “Apple is reporting strong quarterly results, including double-digit growth in Services.”
CFO Kevan Parekh noted that the company’s EPS growth and $24 billion in operating cash flow allowed it to return $29 billion to shareholders during the quarter.
He added that the base of active devices installed climbed to a new high across all product categories and geographies.
Gross margin expanded to 47.05% from 46.58% a year ago, with product gross margin at 35.9% and Services margin at 75.7%.
Apple ended the quarter with a cash position of $133 billion.
How Apple’s Products Fared
The tech giant reported YoY revenue growth for all but one of its product categories.
- iPhone: $46.84B (+1.9%) vs $45.62B consensus
- Mac: $7.95B (+6.7%) vs $7.78B consensus
- iPad: $6.40B (+15.2%) vs $6.23B consensus
- Wearables, Home & Accessories: $7.52B (-4.9%) vs $7.98B consensus
- Services: $26.65 (+11.7%) vs $26.71B consensus
On the earnings call, Parekh said the iPhone active installed base reached a new record high and also clocked records in all geographies, according to a Koyfin transcript. Upgrade rates grew by double digits.
Apple revenue from all geographies increased year over year except in Greater China, a region comprising mainland China, Taiwan, Hong Kong, and Macau.
Revenue from that region was down slightly over 2%, while the Americas, accounting for 42% of the total revenue, reported 1.9% YoY growth. Revenue from Japan climbed by the most (16.5%), followed by the rest of the Asia-Pacific region (8.4%).
Shareholder Return
Apple said its board approved a 4% dividend hike in its quarterly dividend to $0.26, with the dividend payable on May 15 to shareholders of record as of the close of business on May 12.
The board also approved additional repurchase authorization for up to $100 billion of its stock.
Outlook
During the earnings call, Cook said Trump's tariffs would add $900 million to its June quarter costs, assuming the current global tariff rates, policies, and applications do not change for the rest of the quarter.
Parekh said June-quarter revenue will likely grow by low to mid-single digits compared to the year-ago quarter.
On average, analysts estimate EPS of $1.47 and 4.1% YoY revenue growth to $89.03 billion.
The company expects gross margins of 45.5%-47.5%, including the $900-million tariff impact, and operating expenses of $15.3 billion and $15.5 billion.
Cook said, “It’s very difficult to predict beyond June [quarter],” adding that he was not sure what will happen with the tariffs.
Retail Sentiment
On Stocktwits, retail sentiment toward the Apple stock stayed ‘bullish’ (55/100), and the message volume was normal.
A bullish watcher said Apple sellers will regret their decision as they expect a resolution to the tariff crisis.
Another user based their optimism on the earnings beat and the stock buyback the company announced.
Apple stock ended Thursday's session up 0.39% at $213.32 and plunged 3.78% to $205.25 after-hours.
The stock is down over 15% this year and trades well off its Dec. 26 all-time high of $260.10.
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