Apple: Growth Despite Tariff Headwinds
Apple posted double-digit revenue and earnings growth, topping Wall Street's quarterly expectations.
iPhone revenue continues to climb, and the company returned to growth in China.
Expect Apple to continue to face questions about tariffs and AI, but its core franchises remain strong.
10 stocks we like better than Apple ›
Here's our initial take on Apple's (NASDAQ: AAPL) fiscal 2025 third-quarter financial report.
Key Metrics
Metric
Q3 FY24
Q3 FY25
Change
vs. Expectations
Revenue
$85.8 billion
$94.0 billion
10%
Beat
Earnings per share
$1.40
$1.57
12%
Beat
iPhone revenue
$39.3 billion
$44.6 billion
13%
Beat
Services revenue
$24.2 billion
$27.4 billion
13%
Beat
Apple Posts Strong Growth Despite Macro Headwinds
Investors came into earnings season with questions about Apple's ability to weather the impact of tariffs, and the company answered by reporting robust growth. Apple said revenue grew by 10% and earnings per share by 12%, boosted by stronger-than-expected iPhone growth in the quarter.
The sales growth, in a quarter marred by tariff talk, is a reminder of the enduring popularity of the iPhone and the success of a new, more affordable model released earlier this year. Apple has responded to the tariff concerns by shifting shipping patterns, with a majority of iPhones sold in the U.S. now reportedly assembled in India and not China.
Apple had forecast low- to mid-single-digit growth in the quarter, predicting a $900 million headwind from tariffs in the period.
Apple also returned to growth in China, posting sales of $15.4 billion for the quarter compared to $14.7 billion in the same three months of 2024.
The company did not provide a Q4 forecast in the earnings report, but is likely to give some guidance about what it expects in the second half of calendar year 2025 during its call with investors.
Immediate Market Reaction
Investors were happy with the results. Apple stock was up 2% in aftermarket trading immediately following the release but ahead of the company's call with investors.
What to Watch
Apple's numbers were strong, but that was expected. The big question with Apple is not about the numbers, but about what comes next. Apple's AI efforts have floundered so far, and top execs have fled to rivals. There have been reports that Apple could find a partner to bring AI to its devices instead of continuing to develop in-house.
Expect a lot of investor questions about AI on the call, as well as a focus on future devices that Apple can add to its offering along with phones, computers, iPads, and wearables. There is also still a looming uncertainty about tariffs, with tariff exemptions on smartphones expected to lapse and talk of new India tariffs that could further complicate supply chains.
Apple is yet to answer the question about the "next big thing," be it AI or a new device, but the company's core franchises remain massively profitable and show no signs of sputtering from here.
Helpful Resources
Full earnings report
Investor relations page
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