Apple surpasses Q4 revenue forecast, faces $1.1 billion in tariff costs.
Apple just announced current quarter revenue forecasts that far exceeded Wall Street expectations, sending its stock up 3% after hours of trading, despite warnings about a $1.1 billion tariff cost.
Third-quarter revenue far exceeded expectations.
Apple just announced revenue forecasts for the current quarter (ending in September) that are significantly higher than Wall Street estimates. This news helped boost the company's stock price, even though CEO Tim Cook warned that US tariffs would add $1.1 billion in costs during this period.
Apple reported third-quarter revenue (ending June 28, 2025) of $94.04 billion, up nearly 10% year-over-year, exceeding analysts’ forecasts of $89.54 billion. Earnings per share reached $1.57, higher than expectations of $1.43.
iPhone sales, the flagship product, increased 13.5% to $44.58 billion, far exceeding forecasts of $40.22 billion. Part of the growth came from customers buying iPhones early to avoid new tariffs.
Apple's Chief Financial Officer, Kevan Parekh, said the company expects fourth-quarter revenue growth at a "medium to high single-digit" rate, exceeding analysts' forecast of 3.27% (equivalent to $98.04 billion).
Despite facing $1.1 billion in tariffs due to President Donald Trump's trade policies, Apple remains optimistic about growth. Last quarter, tariffs cost the company $800 million.
In the US and the Americas, revenue increased 9.3% to $41.2 billion, despite the impact of tariffs. In China, sales reached $15.37 billion, up from last year and exceeding expectations of $15.12 billion, thanks to the smartphone subsidy program. CEO Tim Cook said this program boosted sales throughout the third quarter. The number of iPhone users reached a record high in all regions.
Revenue from services, including the App Store, music, and cloud storage, reached $27.42 billion, exceeding expectations of $26.8 billion. Mac sales totaled $8.05 billion, surpassing predictions of $7.26 billion.
However, iPad sales reached only $6.58 billion, lower than the expected $7.24 billion, and wearable devices like AirPods and Apple Watch reached $7.4 billion, below the forecast of $7.82 billion. The gross profit margin for the third quarter reached 46.5%, exceeding the expected 45.9%, and is projected to remain at 46-47% in the fourth quarter.
Tariff and AI Challenges
Apple is shifting iPhone production to India and products like Macs and Apple Watches to Vietnam to mitigate the impact of US tariffs. However, the final tariff rates remain unclear, and some products are currently exempt. Trump said India could face a 25% tariff from August 1st, but analysts believe India still has a long-term cost advantage.
Apple also faces competition from Samsung in the high-end smartphone market and Alphabet in integrating AI into the Android operating system.
Apple is experiencing delays in launching its improved AI version of Siri in China due to a lengthy approval process. However, Tim Cook stated that the company is making progress with personalized Siri and is heavily investing in AI. Apple's philosophy is to bring advanced technology to everyone in an easy-to-use way. While not spending as heavily as Microsoft or Nvidia, Apple remains confident in its AI strategy.
Apple faces rulings in Europe that could impact its App Store business model, a crucial source of revenue. However, its services segment continues to grow strongly, helping to offset challenges from tariffs and competition.
With positive forecasts and impressive third-quarter revenue, Apple continues to solidify its position, but needs to overcome many obstacles to maintain its growth momentum.
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