Apple: Growth in a Difficult Environment

Here's our initial take on Apple's (AAPL 0.22%) financial report. Key Metrics Metric Q2 2024 Q2 2025 Change vs. Expectations Revenue $90.8 billion $95.4 billion 5% Beat Earnings per share $1.53 $1.65 8% Beat iPhone revenue $46.0 billion $46.8 billion 2% n/a Services revenue $23.9 billion $26.6 billion 12% n/a Apple Makes Progress Navigating Trade Issues Investor focus coming into this quarter centered on how Apple is navigating ongoing trade wars. The answer was a mixed message. First, the good news: Apple said a majority of its devices shipped into the U.S. in the June quarter will originate from India and Vietnam, alleviating concerns about how China-focused tariffs would eat into profits in 2025. But Apple also said that China revenue fell by more than 2% to $16 billion in its fiscal second quarter, falling slightly below analyst expectations. Overall, the quarter was solid. Apple grew revenue by 5% and earnings per share by 8%, topping analyst estimates. Overall iPhone sales were up slightly, while services revenue posted solid 12% year-over-year gains. Apple generated $24 billion in operating cash flow in the quarter and continues to boost the cash it is returning to shareholders. The company announced a new $100 billion share-repurchase program and said it is boosting its quarterly dividend by 4% to $0.26 per share. Immediate Market Reaction Apple shares were down nearly 15% year to date heading into earnings, and the latest results were not enough to turn the momentum favorable. Apple shares were down 2% in after-market trading after the release of earnings but ahead of the company's call with investors. What to Watch The comments on sourcing iPhones outside of China will come as a relief, but investors are likely to still have questions about what lies ahead for Apple. A shift toward local brands in China could accelerate if U.S.-branded products lose favor due to ongoing trade tensions, a potential worry given that iPhone sales still account for roughly half of overall revenue. Other profit centers are also at risk. Apple's lucrative business getting royalties from Alphabet (GOOG 1.14%) in return for making Google the default search engine on the iPhone is at risk due to antitrust concerns. Investors will likely be eager to hear Apple's outlook in the face of so many headwinds as well as details on Apple product refreshes and AI enhancements designed to stimulate future sales. Helpful Resources Full earnings report Investor relations page