Apple Revenue Forecast Beats Estimates, Tariff Costs Projected at $1.1 Billion

Apple forecast revenue for the current quarter ending in September well above Wall Street's estimates on Thursday, sending shares up despite a warning from CEO Tim Cook that US tariffs would add $1.1 billion in costs over the period.

As the centerpiece of US President Donald Trump's trade war, those tariffs cost Apple $800 million in the June quarter and spurred some customers to buy iPhones in late spring this year. Those purchases helped Apple's fiscal third-quarter sales beat expectations by the biggest percentage in at least four years, according to LSEG.

The company still forecast growth, though, with Chief Financial Officer Kevan Parekh saying the company expects revenue growth for the current quarter in the "mid to high single digits," which would exceed the 3.27 percent growth to $98.04 billion that analysts expected, according to LSEG data.

Apple reported $94.04 billion in revenue for its fiscal third quarter ended on June 28, up nearly 10 percent from a year earlier and beating analyst expectations of $89.54 billion, according to LSEG data. Its earnings per share of $1.57 topped expectations for $1.43 per share.

Apple shares were up 3 percent in after-hours trading, extending gains after Apple provided its forecast.

Sales of iPhones, the best-selling product for the company based in Cupertino, California, were up 13.5 percent to $44.58 billion, beating analyst expectations of $40.22 billion.

Apple has been shifting production of products bound for the US, sourcing iPhones from India and other products such as Macs and Apple Watches from Vietnam.

The ultimate tariff rates many Apple products could face remain in flux, and many of its products are currently exempt. Sales in its Americas segment, which includes the US and could face tariff impacts, rose 9.3 percent to $41.2 billion.

In Greater China, where Apple has faced long delays in approval to introduce AI features on its devices, sales were $15.37 billion, up from a year ago and above expectations of $15.12 billion, according to a survey of five analysts from data firm Visible Alpha.

That gain was a turnaround from a year-over-year decline in China sales in the March quarter.

In a conference call with analysts, Cook said some of that was due to a subsidy program in China to help revive the smartphone market, which boosted some of Apple's products.

"It was the first full quarter of the subsidy playing out," Cook told analysts.

Early Purchases

In an interview with Reuters, Cook said the company set seasonal records for upgrades of iPhones, Macs and Apple Watches. He said Apple estimates about 1 percentage point of its 9.6 percent of sales growth in the quarter was attributable to customers making purchases ahead of potential tariffs.

"We saw evidence in the early part of the quarter, specifically, of some pull-ahead related to the tariff announcements," Cook told Reuters, though he also said the active user base for iPhones hit a record high in all geographies.

The US is still negotiating with both China and India, with Trump saying India could face 25 percent tariffs as early as Friday. However, analysts said India could still retain cost advantages for Apple in the longer term.

"The pull-forward in demand due to tariffs was somewhat expected given the uncertainty around pricing. However, it's important to put this in context as this is typically a slow quarter for Apple, yet they still delivered exceptional results with iPhone growth," Emarketer analyst Jacob Bourne said.

Tariffs are only one of Apple's challenges. The company faces competition from rivals such as Samsung Electronics Co in a tough market for premium-priced mobile phones. On the software front, Apple faces challenges from Alphabet, which is quickly weaving AI features into its competing Android operating system.

While AI leaders Microsoft and Nvidia have seen their stock market values soar to record highs, Apple's shares have fallen 17 percent in 2025, with investors concerned about the impact of tariffs, and about what they view as slow progress integrating AI features into its products.

Apple has delayed the release of an AI-enriched version of Siri, its virtual assistant, but Cook said the company is "making good progress on a personalized Siri." He also said Apple, which has thus far not engaged in the massive capital expenditures of its Big Tech rivals to pursue AI, is "significantly growing" its investments in artificial intelligence.

"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.

Apple faces regulatory rulings in Europe that threaten to undermine its lucrative App Store business. Apple said sales from its services business, which includes the App Store as well as music and cloud storage, were $27.42 billion, topping analyst expectations of $26.8 billion.

Sales of wearables such as AirPods and Apple Watches were $7.4 billion, missing estimates of $7.82 billion. Mac sales of $8.05 billion beat expectations of $7.26 billion, while iPads hit $6.58 billion in sales, missing expectations of $7.24 billion.

Apple said gross margins were 46.5 percent in the fiscal third quarter, beating analyst expectations of 45.9 percent, according to LSEG estimates. The company forecast gross margins for the current quarter of 46 percent to 47 percent, with the entire range above estimates of 45.9 percent, according to LSEG data.

© Thomson Reuters 2025