Apple has reported stronger-than-expected quarterly results, with revenue rising 10% to $94 billion and profits up 9% to $23.4 billion, defying headwinds from US tariffs and a slow start in artificial intelligence. The company's iPhone sales surged 13% to $44.6 billion, beating analyst forecasts and lifting Apple's stock by 2% in after-hours trading.
However, the solid performance masks significant challenges. President Donald Trump's trade war has already cost Apple $900 million in tariffs during the quarter, and the administration's threat to impose a 25% tariff on goods from India could force the company to raise iPhone prices later this year. Apple has shifted some iPhone production from China to India to mitigate the impact.
Apple also faces growing competition in AI, where rivals like Nvidia and Microsoft have seen their shares surge 32% and 27% respectively this year, while Apple's stock has fallen 17%, wiping out over $600 billion in market value. The company has yet to deliver on promised AI upgrades for its Siri virtual assistant, which analysts say could dampen demand for new iPhones.
“There are two big questions looming over Apple: How are you going to rejigger your business model to deal with the new tariff backdrop and then what is the company going to do to drive an upgrade cycle for the iPhone?” said Melissa Otto, an analyst at S&P’s Visible Alpha.
