Apple beats Wall Street forecasts despite $1.1 billion tariff hit, iPhone sales surge

Tech giant Apple has defied investor concerns over US trade policy, posting stronger-than-expected revenue for its fiscal third quarter. This comes as President Donald Trump’s tariffs added a staggering $800 million in costs last quarter and are projected to rise to $1.1 billion in the current one. According to Reuters, Apple reported $94.04 billion in revenue for the quarter ending June 28, marking a 9.6 per cent year-on-year increase, which was the fastest pace since the pandemic era. Earnings per share stood at $1.57, comfortably beating analyst forecasts of $1.43, as per LSEG data. Shares of the Cupertino-based firm rose 3 per cent in after-hours trading following its upbeat guidance for the current quarter. Apple now expects mid-to-high single-digit revenue growth, well above the 3.27 per cent Wall Street had predicted.

Tariff shock, early buying

Despite the strong results, Apple acknowledged the growing impact of Washington’s trade war. Speaking to Reuters, CEO Tim Cook said tariffs added $800 million to costs in the June quarter and are expected to add $1.1 billion in the current period. Cook also noted that some customers rushed to buy iPhones early to avoid potential price hikes. “We saw evidence in the early part of the quarter, specifically, of some pull-ahead related to the tariff announcements,” Cook told Reuters.

Apple estimates that this “pull-ahead” demand accounted for roughly 1 percentage point of the company’s 9.6 per cent revenue growth. Emarketer analyst Jacob Bourne said this front-loaded demand was not surprising, telling Reuters, “The pull-forward in demand due to tariffs was somewhat expected given the uncertainty around pricing… but they still delivered exceptional results with iPhone growth.”

iPhone leads the charge, China rebounds

The iPhone, Apple’s flagship product, surged 13.5 per cent year-on-year to $44.58 billion in sales, well ahead of analyst estimates of $40.22 billion. Cook noted it was a strong quarter for seasonal upgrades of iPhones, Macs, and Apple Watches.

In Greater China, Apple recorded $15.37 billion in revenue, reversing a decline seen in the previous quarter. Analysts from Visible Alpha, cited by Reuters, had expected $15.12 billion. Cook credited a Chinese subsidy programme for reviving smartphone demand. “It was the first full quarter of the subsidy playing out,” Cook said during a conference call with analysts.

Services shine, AI efforts lag rivals

Apple’s services division, which includes the App Store, iCloud, and Apple Music, brought in $27.42 billion, beating expectations of $26.8 billion, according to LSEG. However, not all segments outperformed. Sales of wearables such as AirPods and Apple Watches came in at $7.4 billion, missing the $7.82 billion target. iPad sales also fell short, at $6.58 billion versus an expected $7.24 billion. On the flip side, Mac sales exceeded forecasts, hitting $8.05 billion.

Gross margins stood at 46.5 per cent, above LSEG estimates of 45.9 per cent, and Apple has forecast margins between 46 and 47 per cent for the current quarter. Despite the strong quarter, Apple still faces challenges. Its stock is down 17 per cent in 2025, lagging behind AI-focused rivals like Microsoft and Nvidia. Some investors remain concerned over Apple’s slower rollout of artificial intelligence features. Apple has delayed a new AI-enhanced version of Siri, but Cook insisted progress is being made. “Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone, and that’s at the heart of our AI strategy,” Cook said, as quoted by Reuters.

Production shifts, policy risks

Amid tariff headwinds, Apple has been actively shifting its supply chain, moving more iPhone production to India and expanding manufacturing in Vietnam for Macs and Apple Watches. However, trade tensions continue to loom, with Trump warning India may face tariffs of up to 25 per cent as early as Friday, according to Reuters.

While the long-term tariff landscape remains uncertain, Apple appears to be navigating the storm, leaning on early consumer purchases, production diversification, and continued strength in its ecosystem.

(With inputs from the agencies)