Apple shares rise after beating forecasts despite tariffs
'Although there are specific drivers like China subsidies that can be attributed for some of the exceptional strength, the acceleration in revenue growth ... is equally surprising, especially in a quarter when consumers typically hold off purchases ahead of the next iPhone launch in September,' J.P.Morgan analysts said.
Apple has been rebalancing its manufacturing footprint, sourcing iPhones from India and other products such as Macs and Apple Watches from Vietnam, while much of its product line still benefits from tariff exemptions.
CEO Tim Cook warned that tariffs would raise costs by $1.1 billion in the current quarter after the company said it took an $800 million hit from tariffs in the third quarter.
The company also faces stiff competition from hardware rivals such as Samsung Electronics in the premium smartphone space and software giant Alphabet, which is rapidly embedding AI into Android and ramping up AI spending with growing returns.
Among the 'Magnificent Seven' stocks, Apple has lagged behind this year, with its stock down 17%, as it grapples with staying competitive in the fast-evolving AI space. Apple has delayed the release of its AI-enhanced virtual assistant - Siri, and was slow to launch Apple Intelligence, but Cook said the company is making headway and scaling up its AI spending to catch up with Big Tech rivals. 'Brand loyalty gives Apple time to get the AI transition right, but it needs to start delivering', said Matt Britzman, senior equity analyst, Hargreaves Lansdown. - Reuters
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