On Thursday, Apple significantly raised its revenue forecast for the quarter ending in September, surpassing expectations on Wall Street and leading to an increase in share prices. This positive outlook came, however, alongside a caution from CEO Tim Cook regarding the impact of US tariffs, which are anticipated to impose an additional $1.1 billion in costs during this timeframe.
These tariffs, central to the ongoing trade conflict initiated by US President Donald Trump, resulted in an $800 million cost to Apple in the June quarter. They also prompted some consumers to purchase iPhones earlier than usual. Consequently, Apple’s fiscal third-quarter sales surpassed predictions by the largest margin in four years, as reported by LSEG.
The company remains optimistic about future growth. Chief Financial Officer Kevan Parekh noted an expected revenue increase in the current quarter between the “mid to high single digits,” surpassing the 3.27 percent growth analysts had forecast to reach $98.04 billion, according to LSEG data.
In its fiscal third quarter, Apple reported revenues of $94.04 billion, marking a nearly 10 percent increase from the same period last year and exceeding analyst estimates of $89.54 billion, as outlined by LSEG. Earnings per share also exceeded expectations, coming in at $1.57 compared to the anticipated $1.43.
Following the earnings report, Apple shares rose by 3 percent in after-hours trading, continuing their upward trajectory following the company’s optimistic forecast.
Sales of iPhones, Apple’s flagship product, increased by 13.5 percent, reaching $44.58 billion, which was also above the anticipated $40.22 billion from analysts.
In response to tariffs, Apple has been realigning its production strategy, sourcing iPhones from India and manufacturing other products, including Macs and Apple Watches, in Vietnam.
The specific tariff rates on many Apple products remain uncertain, although many items are currently exempt. Sales within its Americas region, which encompasses the US and could be affected by tariffs, rose by 9.3 percent to $41.2 billion.
In Greater China, Apple reported sales of $15.37 billion, a year-on-year increase that exceeded expectations of $15.12 billion, based on analysis from Visible Alpha’s five analysts. This growth represented a reversal from the decline seen in Chinese sales during the March quarter.
During a conference call, Cook attributed some of this uptick to a subsidy program in China aimed at rejuvenating the smartphone market, which benefitted various Apple products. “It was the first full quarter of the subsidy playing out,” he explained.
Early Purchases
In a conversation with Reuters, Cook indicated that the company set records for seasonal upgrades of iPhones, Macs, and Apple Watches, estimating that about 1 percentage point of the overall 9.6 percent sales growth for the quarter was linked to customers purchasing items in anticipation of impending tariffs.
“We witnessed signs of a pull-ahead in demand early in the quarter, particularly relating to the tariff announcements,” Cook stated, noting that the active user base for iPhones reached historic highs across all regions.
The US continues to negotiate with both China and India, with Trump suggesting that India might face 25 percent tariffs shortly. Analysts, however, believe that India may maintain cost advantages for Apple in the long term.
Though the pull-forward in demand due to tariffs was somewhat anticipated amidst pricing uncertainties, analysts argue this dynamic must be contextualized. Traditionally, this quarter is slower for Apple, yet the company still achieved impressive results in iPhone sales, remarked Emarketer analyst Jacob Bourne.
Apple identifies tariffs as merely one challenge among many. The company contends with fierce competition in high-end mobile phones, particularly from Samsung Electronics Co. In the realm of software, Apple faces challenges from Alphabet, which is rapidly integrating AI capabilities into its Android operating system.
While AI frontrunners Microsoft and Nvidia have seen their stock values surge to record heights, Apple’s shares have declined by 17 percent in 2025, with investor concerns revolving around tariff implications and a perceived slow pace in AI integration across its product line.
Although Apple has postponed the launch of an AI-enhanced version of its virtual assistant Siri, Cook indicated the company is “making good progress on a personalized Siri.” He further noted that Apple, which has not engaged in large-scale capital investments in AI like some of its Big Tech counterparts, is “significantly growing” its expenditures in artificial intelligence.
“Apple has always focused on leveraging the most advanced technologies to make them user-friendly and accessible to everyone,” Cook emphasized, referring to the company’s AI strategy.
In Europe, Apple faces regulatory challenges that could jeopardize its profitable App Store operations. Nevertheless, the company reported service revenue, including from the App Store, music, and cloud services, of $27.42 billion, surpassing analyst predictions of $26.8 billion.
Sales from wearables, including AirPods and Apple Watches, reached $7.4 billion, falling short of estimates of $7.82 billion. Mac sales were reported at $8.05 billion, exceeding expectations of $7.26 billion, while iPad sales totaled $6.58 billion, missing the anticipated $7.24 billion.
Apple’s gross margins stood at 46.5 percent in the latest fiscal quarter, beating the expected 45.9 percent margin, according to LSEG estimates. The company projected gross margins for the upcoming quarter to range between 46 percent and 47 percent, with the entire range remaining above industry estimates.
© Thomson Reuters 2025
