Apple edges up premarket as investors weigh estimated tariff costs, iPhone sales

Investing.com - Apple reported fiscal third-quarter results that beat Wall Street estimates, driven by better-than-expected iPhone sales, but the firm warned of higher tariff-related expenses in its current quarter.

Shares of Apple (NASDAQ:AAPL) rose more than 1% in premarket U.S. trading on Friday, as analysts also noted muted tailwinds from AI. Some observers have argued that Apple has fallen behind in the AI arms race, potentially denting the future appeal of its products against AI-enhanced rivals.

For the three months ended June 28, Apple reported earnings of $1.57 per share on revenue of $94.04 billion. Analysts polled by Investing.com had anticipated per-share income of $1.43 on revenue of $89.53 billion.

Sales of Apple’s flagship iPhone handset, which account for nearly half of total revenue, rose 13% to $44.58 billion, compared to estimates of $40.22 billion.

"Our installed base of active devices also reached a new all-time high across all product categories and geographic segments," the company said.

Demand in China, where Apple has been grappling with intensifying domestic competition, regained some ground after declining on an annualized basis in the March quarter. Apple’s sales in Greater China increased to $15.37 billion from $14.73 billion a year earlier, topping estimates of $15.19 billion.

Apple’s services segment, which includes its Apple Pay and App Store offerings, increased 13% year-on-year to $27.42 billion, beating Wall Street projections of $26.80 billion.

Despite describing the returns as solid, analysts flagged that U.S. President Donald Trump’s sweeping tariffs, and their impact on Apple’s well-oiled international supply chain, are still a major question mark around the business. Apple has begun to ship more iPhones to the U.S. from India in a bid to avoid steep tariffs from China. 

Executives at Apple told investors in a post-earnings call that the anticipated impact from the levies in its September quarter is now seen at $1.1 billion. The firm previously said it would incur a trade-fueled hit of around $800 million in its April-to-June period.

"The $1.1 billion is not the issue, it’s small, about 2% of revenue. The problem is it went up quarter on quarter and begs the questions for investors where is this tariff thing leading to for Apple," said Gene Munster, Managing Partner at Deepwater Management, in a post on X.

An imminent ruling in a U.S. court about whether Google (NASDAQ:GOOGL) can pay for search exclusivity on Apple devices presents another possible headwind, analysts at Vital Knowledge flagged. 

"[I]f it can’t, that might mean a massive hit to Apple’s services revenue and overall operating income," the analysts said.The judge in the case is reportedly set to deliver his decision in early August.

(Yasin Ebrahim contributed reporting.)