Apple reported Q2 2025 results that topped analyst expectations, but its stock fell after CEO Tim Cook warned of a $900 million tariff cost in the current quarter.
Q2 Performance Shows Growth
Apple delivered solid numbers for the quarter ending March 29, 2025:
- Revenue: $95.4 billion (up 5% year-over-year)
- Earnings per share: $1.65 (up 8%)
- iPhone sales: $46.84 billion (exceeding $45.84 billion estimates)
- Mac revenue: $7.95 billion (up 7%)
- iPad revenue: $6.4 billion (up 15%)
- Services revenue: $26.65 billion (up 11.65%)
The company’s gross margin reached 47.1%, matching analyst expectations.
Tariffs Create Major Headwind
Cook told analysts the tariff impact was “limited” in Q2 thanks to supply chain adjustments, but Q3 will absorb an estimated $900 million hit if current rates remain unchanged.
“It is very difficult to predict beyond June because I’m not sure what will happen with tariffs,” Cook said during the earnings call.
The tariffs impose a steep 145% combined rate on select Chinese-made AppleCare services and accessories, though Apple’s flagship products including iPhones, iPads, and computers have dodged these hefty reciprocal duties announced in April.
Manufacturing Shifts Underway
Apple is actively moving production for U.S.-bound products:
- “A majority of iPhones sold in the United States” in Q3 will come from India
- “Almost all iPad, Mac, Apple Watch, and AirPods products” for U.S. consumers will be manufactured in Vietnam
- Products sold elsewhere will mostly continue to come from China
“Having everything in one location had too much risk,” Cook explained.
The company also plans to source more than 19 billion chips from the U.S. this year.
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Investor Concerns Mount
Despite beating Q2 estimates, several factors drove Apple’s stock down:
- Weak performance in China, where sales dropped 2.3% to $16 billion, missing the $16.8 billion analyst projection
- AI development delays, including postponed Siri features that were previously advertised
- Questions about the timeline and costs of shifting production to India and Vietnam
Capital Returns Continue
Apple maintained its shareholder-friendly approach:
- Raised quarterly dividend 4% to $0.26 per share
- Authorized $100 billion in share repurchases (down from $110 billion last year)
- Generated $24 billion in operating cash flow
Q3 Outlook
For the current quarter, Apple projects “low to mid-single digit” revenue growth compared to Q3 2024’s $85.78 billion.
“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 stated.
The company expects continuing challenges from tariffs and China market weakness, while investors closely watch how its supply chain shifts progress.
