Apple's second fiscal-quarter earnings report beat Wall Street expectations, but the company's closely-watched Services division fell short of estimates. Despite the mixed bag, the tech giant's stock took a hit in after-hours trading, with investors growing increasingly concerned about the impact of tariffs on the company's bottom line.
During a CNBC interview, CEO Tim Cook acknowledged the challenges of forecasting tariff costs beyond June, citing the uncertainty surrounding ongoing trade negotiations. "I'm not sure what will happen with tariffs," Cook said, "and it's very difficult to predict." The company has already factored in $900 million of tariff-related costs for the current quarter, assuming no major changes occur.
Cook also highlighted Apple's efforts to mitigate the impact of tariffs by diversifying its supply chain. The company is already sourcing about half of the iPhones destined for the U.S. market from India, where tariffs are significantly lower than in China. Additionally, most of Apple's other products for the U.S. market are being manufactured in Vietnam, where tariffs are also lower than those levied on Chinese imports.
Despite these efforts, investors remain skeptical about the long-term implications of tariffs on Apple's business. The company's reliance on China for a significant portion of its manufacturing and supply chain makes it particularly vulnerable to the ongoing trade tensions. As a result, Apple's stock price dropped sharply in after-hours trading, with investors increasingly concerned about the company's ability to maintain its profit margins in the face of escalating tariffs.