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Wall Street to scrutinize Apple over China struggles and slow AI progress Apple quietens Wall Street’s fears of China struggles and slow AI progress
(about 1 hour later)
Tech company expected to report 4% rise in revenue over past quarter despite drop in stock price and looming tariffs Tech giant sees double-digit revenue rise, with huge gains in iPhone sales, despite stock-price drop and looming tariffs
Apple has been under pressure this year. It’s playing catch-up to its fellow tech giants on artificial intelligence, it’s seen its stock fall by double digits since the year began, it closed a store in China for the first time ever this week, and looming US tariffs on Beijing threaten its supply chain. On Thursday, the company will release its third-quarter earnings of the fiscal year as investors scrutinize how the iPhone maker might turn things around. Apple has been under pressure this year. It’s playing catch-up to its fellow tech giants on artificial intelligence, it’s seen its stock fall by double digits since the year began, it closed a store in China for the first time ever this week, and looming US tariffs on Beijing threaten its supply chain. On Thursday, the company released its third-quarter earnings of the fiscal year as investors scrutinize how the iPhone maker might turn things around.
Despite the gloomy outlook, the company is still worth more than $3tn, and Wall Street appears optimistic it will deliver on earnings. Analysts are expecting Apple to report a 4% rise in revenue over the last quarter to $89.3bn, according to S&P Global. Despite the gloomy outlook, the company is still worth more than $3tn, and it beat Wall Street’s expectations for profit and revenue this quarter. Apple reported a massive 10% year-over-year increase in revenue to $94.04bn, and $1.57 per share in earnings. That’s substantially more than the $89.3bn in revenue and $1.43 per share than analysts predicted.
“Apple has grown accustomed to having revenue growth in this high-margin services business, which masks other areas of the business not performing as well,” said Dipanjan Chatterjee, a vice-president and principal analyst for Forrester. Apple’s iPhone revenue also outperformed Wall Street’s expectations, coming in 13% higher than the same time last year.
Chatterjee points to several issues that have led to Apple’s less-than-stellar performance of late. He says Apple has lagged on hardware innovation, causing “consumer apathy” and its AI rollout has been glitchy. Apple Intelligence, Apple’s AI product, has been limited to incremental features and rather than transformational upgrades. And it’s been more than a year since Apple announced a suite of AI upgrades to its voice assistant Siri – many of which have yet to be released. Tim Cook, Apple’s chief executive, said in a statement that the company was “proud” to report a “June quarter revenue record”, showing growth in its iPhone, Mac and services divisions.
Dipanjan Chatterjee, a vice-president and principal analyst for Forrester, said rising services tend to boost the company’s revenue stream. “Apple has grown accustomed to having revenue growth in this high-margin services business, which masks other areas of the business not performing as well,” Chatterjee explained .
He pointed to several issues that have led to Apple’s less-than-stellar product performance of late. He said Apple has lagged on hardware innovation, causing “consumer apathy” and its AI rollout has been glitchy. Apple Intelligence, Apple’s AI product, has been limited to incremental features and rather than transformational upgrades.
And it’s been more than a year since Apple announced a suite of AI upgrades to its voice assistant Siri – many of which have yet to be released.
“This work [on Siri] needed more time to reach our high-quality bar,” said Craig Federighi, Apple’s vice-president of software engineering, during the company’s developer conference in June.“This work [on Siri] needed more time to reach our high-quality bar,” said Craig Federighi, Apple’s vice-president of software engineering, during the company’s developer conference in June.
Donald Trump’s sweeping tariffs have also been a pain point for the company as the US president pushes his desire for manufacturing to boom in the US. The vast majority of Apple’s products are made in China, with about 90% of iPhones assembled there, despite recent efforts to shift production elsewhere. Apple’s chief, Tim Cook, said during the company’s last quarterly earnings call that he expected the China tariffs to add $900m to its costs this quarter. Donald Trump’s sweeping tariffs have also been a pain point for the company as the US president pushes his desire for manufacturing to boom in the US. The vast majority of Apple’s products are made in China, with about 90% of iPhones assembled there, despite recent efforts to shift production elsewhere. Cook during the company’s previous quarterly earnings call that he expected the China tariffs to add $900m to its costs this quarter.
Apple has attempted to pivot, moving more of its manufacturing to other countries such as India and Vietnam. However, this week, Trump announced a rise in tariffs on India, too, up to 25% starting on 1 August.Apple has attempted to pivot, moving more of its manufacturing to other countries such as India and Vietnam. However, this week, Trump announced a rise in tariffs on India, too, up to 25% starting on 1 August.
Because of the external and internal pressures, Apple has seen its share price plummet this year. Once the industry leader of the “Magnificent Seven” – the most valuable publicly traded companies in the world, all American technology giants – Apple boasted the highest-performing stock and biggest market capitalization on the US stock market.
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Now its share price is the second-worst performing after Tesla in percentage decline among the seven. Since January, Apple’s stock has fallen roughly 15%. Because of the external and internal pressures, Apple has seen its share price plummet this year. Once the industry leader of the “Magnificent Seven” – the most valuable publicly traded companies in the world, all American technology giants – Apple boasted the highest-performing stock and biggest market capitalization on the US stock market.
Now its share price is the second-worst performing after Tesla in percentage decline among the seven. Since January, Apple’s stock has fallen roughly 15%. In after-hours trading on Thursday, though, the company saw a slight increase of 1.5% in its share price.