Skip to content 
Apple just released its fiscal Q2 2025 earnings, and the results paint an interesting picture of a company navigating both technological and geopolitical challenges. The iPhone maker posted quarterly revenue of $95.4 billion, up 5% year over year, with earnings per share of $1.65, an 8% increase. While these numbers beat Wall Street expectations, there’s more to the story than meets the eye.
The company’s product lines showed mixed performance:
- iPhone revenue: $46.84 billion (up 2% YoY, beating estimates of $45.84 billion)
- Mac revenue: $7.95 billion (up nearly 7% YoY)
- iPad revenue: $6.4 billion (up 15% YoY)
- Wearables, Home, and Accessories: $7.52 billion (down 5% YoY)
- Services revenue: $26.65 billion (up 11.65% YoY, but slightly missing expectations)
Tim Cook, Apple’s CEO, highlighted “double-digit growth in Services” as a bright spot, while also mentioning the introduction of the iPhone 16e, new Macs, and iPads. However, the market response was tepid at best, with shares falling as much as 4% in extended trading.
The Tariff Elephant in the Room
Perhaps the most significant revelation from Apple’s earnings call was Cook’s commentary on tariffs. The company expects tariffs to add $900 million to its costs for the current quarter alone, assuming no new levies are introduced. This admission came after months of diplomatic maneuvering by Apple’s chief executive.
When President Trump imposed 145% tariffs on exports from China—where Apple makes 80% of its iPhones—along with tariffs on other countries manufacturing iPads and Macs, the company’s market value plummeted by approximately $770 billion in just four days. Some analysts predicted iPhone prices would need to increase from $1,000 to $1,600 to absorb these costs.
However, Cook’s diplomatic efforts appear to have paid off, at least temporarily. After personally donating $1 million to Trump’s inauguration, Cook successfully lobbied the White House to relax its tariffs on Apple products.
Supply Chain Reshuffling
Apple’s response to the tariff threat has been swift and strategic. Cook revealed that the company is now sourcing about half of the iPhones for the U.S. market from India, with plans to increase this to a majority in the current quarter. Similarly, most of its other products destined for American consumers—including Macs, iPads, and AirPods—are being manufactured in Vietnam, where tariffs are lower than those from China.
“We will manage the company the way we always have, with thoughtful and deliberate decisions,” Cook assured investors on the earnings call. “As we look ahead, we remain confident.”
This supply chain reshuffling represents a significant shift for Apple, which has historically relied heavily on Chinese manufacturing. The company continues to produce the “vast majority” of its products for other global markets in China, according to Cook, demonstrating the complexity of managing a global supply chain in an era of increasing protectionism.
China: The Challenging Market
While Apple has successfully navigated tariff challenges for now, its performance in the Chinese market remains a concern. The company reported $16 billion in revenue from Greater China (which includes Taiwan and Hong Kong), representing a 2% decline year-over-year—marking the sixth consecutive quarter of declining sales in the region.
Cook attempted to paint a more positive picture, noting that China sales were accelerating on a quarterly basis and would have been flat if not for foreign exchange rates. However, China was the only region where Apple’s sales declined, highlighting the challenges the company faces in one of its most crucial markets.
Services: The Golden Goose Under Threat?
Apple’s Services division has been a reliable growth engine, with revenue increasing by 11.65% to $26.65 billion this quarter. This segment includes iCloud subscriptions, Apple Music, Apple TV+, warranties, and revenue from search licensing deals like its agreement with Google.
However, the future of this golden goose is uncertain. A recent federal court ruling prevents Apple from collecting a 27% commission on app sales made outside the App Store, potentially allowing developers to bypass Apple’s fee structure entirely. While Cook indicated that Apple disagrees with the ruling and plans to appeal, this represents a significant threat to one of the company’s most profitable business segments.
Additionally, in a separate antitrust case, Apple could lose up to $20 billion in services revenue that Google pays to be the default search engine on iPhone web browsers. These legal challenges cast a shadow over the long-term growth prospects of Apple’s services business.
AI Delays: A Temporary Setback?
Last year, Apple announced an ambitious generative AI system called Apple Intelligence, which was positioned as a major selling point for new iPhones. However, in March, the company pulled its advertisements promoting these features and acknowledged that some would be delayed until later this year.
“We just need more time to complete the work, so they meet our high quality bar,” Cook explained during the earnings call. “It’s taking a bit longer than we thought. But we are making progress.”
This delay represents a setback in Apple’s efforts to compete with other tech giants in the AI space, potentially impacting consumer interest in upgrading to the latest iPhone models.
Amazon’s Parallel Challenges
Meanwhile, Amazon also reported its quarterly earnings, showing better-than-expected results but offering soft guidance for the current period due to similar tariff concerns.
The e-commerce and cloud computing giant reported earnings per share of $1.59 on revenue of $155.67 billion, beating analyst expectations of $1.36 EPS on $155.04 billion in revenue. However, Amazon’s stock also fell in extended trading, dropping more than 2%.
For the upcoming quarter, Amazon expects operating income between $13 billion and $17.5 billion, below the consensus forecast of $17.64 billion. The company explicitly cited “tariffs and trade policies” among factors that could affect its guidance—something it did not mention in its previous quarter’s outlook.
Amazon’s Tariff Exposure
Like Apple, Amazon faces significant exposure to Trump’s tariffs, particularly through its retail unit. The company sources some products directly from China, which was hit with the 145% levy. More importantly, many sellers on Amazon’s third-party marketplace—accounting for more than half the company’s total sales—rely on Chinese manufacturing.
The situation led to a public confrontation with the White House earlier this week over reports that Amazon planned to show shoppers the cost of tariffs on product pages. The White House press secretary called this potential move “a hostile and political act,” and according to reports, President Trump personally called Jeff Bezos to complain.
Amazon quickly denied the plan, stating, “The team that runs our ultra-low cost Amazon Haul store considered the idea of listing import charges on certain products. This was never approved and is not going to happen.”
The episode highlights the delicate position tech companies find themselves in as they navigate both the economic realities of tariffs and potential political backlash.
AWS: The Cloud Growth Engine Slows
Amazon Web Services (AWS), the company’s cloud computing division and a major profit driver, posted revenue of $29.3 billion, just below consensus estimates. This marked the third consecutive quarter of revenue misses for AWS, with growth slowing to 17% during the quarter—below analysts’ expectations.
The deceleration in AWS growth represents a concerning trend for Amazon, especially as competition intensifies in the cloud computing space from rivals like Microsoft Azure and Google Cloud.
The Silver Lining: Advertising
One bright spot in Amazon’s report was its advertising business, which grew 19% year over year to $13.92 billion during the quarter. This growth outpaced the company’s core retail business and exceeded analyst expectations of $13.74 billion.
Amazon’s CEO Andy Jassy expressed cautious optimism about navigating the uncertain tariff environment, suggesting that the company’s scale and ability to offer low prices could allow it to emerge stronger than before. He pointed to the COVID-19 pandemic as a period when shoppers flocked to Amazon, helping the company grow its market share despite economic turmoil.
“It’s hard to tell what’s going to happen with tariffs right now,” Jassy told investors. “It’s hard to tell where they’re going to settle and when they’re going to settle.”
The Bigger Picture: Tech Giants in a Changing World
The earnings reports from Apple and Amazon reveal tech giants grappling with a new reality—one where geopolitical tensions and protectionist policies are reshaping global supply chains and business strategies. Both companies are adapting by:
- Diversifying manufacturing locations away from China to countries like India and Vietnam
- Engaging in diplomatic efforts with political leaders to secure exemptions or delays
- Carefully navigating communication about tariff impacts to avoid political backlash
- Focusing on high-margin services to offset potential hardware cost increases
- Managing investor expectations in an uncertain policy environment
What This Means for Consumers
For consumers, these developments could have several implications:
- Potential price increases: While both companies are working to absorb tariff costs through supply chain adjustments, some price increases may be inevitable if tariffs persist or expand
- Delayed product launches: Apple’s postponement of AI features suggests that product roadmaps may be affected by both technical challenges and economic pressures
- Shifting shopping patterns: If tariffs significantly impact pricing on Amazon’s marketplace, consumer behavior could change, potentially benefiting domestic suppliers
Looking Ahead: Uncertainty Reigns
Both Apple and Amazon face a period of continued uncertainty as they navigate the evolving tariff landscape. Apple’s CFO Kevan Parekh indicated that the company expects overall revenue to grow “low to mid-single digits” annually during the current quarter, while Amazon projects sales growth between 7% and 11%.
However, these projections come with significant caveats related to tariff developments. As Cook succinctly put it, it is “very difficult” to predict beyond June “because I’m not sure what will happen with tariffs.”
The ability of these tech giants to maintain growth while adapting to changing political and economic conditions will be crucial to their long-term success. For now, both companies are demonstrating resilience through supply chain flexibility, diplomatic engagement, and a focus on high-margin services.
As investors digest these earnings reports, they’ll be watching closely for any signs of how the tariff situation evolves—and how skillfully Apple and Amazon continue to navigate these choppy waters.
Disclaimer: This article draws from sources such as Financial Times, Bloomberg,and other reputed media houses. Please note, this blog post is intended for general educational purposes only and does not serve as an offer, recommendation, or solicitation to buy or sell any securities. It may contain forward-looking statements, and actual outcomes can vary due to numerous factors. Past performance of any security does not guarantee future results.This blog is for informational purposes only. Neither the information contained herein, nor any opinion expressed, should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives.The information and opinions contained in the report were considered by VF Securities, Inc.to be valid when published. Any person placing reliance on the blog does so entirely at his or her own risk, and does not accept any liability as a result.Securities markets may be subject to rapid and unexpected price movements, and past performance is not necessarily an indication of future performance. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding investment in securities markets.Past performance is not a guarantee of future results.
